Documentof The WorldBank FOR OFFICIAL USE ONLY Report No: T7704-AF TECHNICAL ANNEX FORA PROPOSEDGRANT INTHE AMOUNT OF SDR71.4 MILLION (US$112 MILLIONEQUIVALENT) TO THE ISLAMIC REPUBLIC OF AFGHANISTAN FOR A NATIONAL EMERGENCY RURALACCESS PROJECT (NERAP) November 14,2007 SustainableDevelopmentDepartment Afghanistan Country ManagementUnit South Asia Region This document has a restricted distribution and maybe usedby recipients only inthe performance o ftheir official duties. Its contents mav not otherwise be disclosed without World Bank GrouD authorization. CURRENCYEQUIVALENT (As of October 31,2007) Currency Unit - - Afghani US$1 - - 49.8 AFN SDRl - - US$1.56936 GOVERNMENTFISCALYEAR March21-March20 ABBREVIATIONSAND ACRONYMS Framework FA Float Account NGO Nongovernmental organization FMA Financial management agent NPP National Priority Program GOA Government o fAfghanistan NPV Net present value I-ANDs InterimAfghanistan National NRAP National Rural Access Program Unit LIWP Labor-intensive Works Project PIU Programimplementation unit M&E Monitoring and evaluation PRTs Provincialreconstructionteams M I S Management information system SDU SpecialDisbursement Unit M o F Ministry o fFinance UNOPS UnitedNations Office for Project Services MPW Ministry o fPublic Works Vice President : PrafulC. Pate1 Country Director : Alastair J.McKechnie Sector Director : Constance Bernard Sector Manager : GuangZhe Chen Task Team Leaders : Susanne HolsteM. Qahir Haidari FOROFFICIAL USE ONLY ISLAMICREPUBLIC OF AFGHANISTAN ProposedNATIONAL EMERGENCY RURALACCESSPROJECT TECHNICAL ANNEX Table of Contents A .1.BACKGROUNDAND STRATEGY ........................................................................................... 1 Project Rationale............................................................................................................ 1 1 B .2 . Government Strategy ..................................................................................................... BANKRESPONSEAND STRATEGY ....................................................................................... 7 1. The RuralAccess PolicyNote ....................................................................................... 7 2. Rationale for Bank Involvement .................................................................................... 8 C .3 . LessonsLearnedandReflectedintheDesignoftheProgramandtheProject.............9 1.DETAILED PROJECTDESCRIPTION .................................................................................. 10 Project Objective.......................................................................................................... 10 2. Project Description....................................................................................................... 10 3. Project Components ..................................................................................................... 11 D INSTITUTIONAL ARRANGEMENTSAND PROJECTIMPLEMENTATION .4 . Risks............................................................................................................................. ...............13 15 1. Institutional Set up ....................................................................................................... 15 2. ImplementationArrangements ..................................................................................... 16 3. Procurement ................................................................................................................. 17 4. Financial Management. Disbursement andAudit........................................................ 19 21 E .5.ECONOMIC Monitoring and Evaluation .......................................................................................... ASPECTS and,JUSTIFICATION ..................................................................... 23 1. Project Benefits ............................................................................................................ 23 24 F.2 . Sustainability................................................................................................................ ENVIRONMENTAL AND SOCIAL SAFEGUARDS ............................................................. 25 1. Environmental and Social Impact and Safeguards....................................................... 25 2. Potential Environmental and Social Impacts ............................................................... 26 3. SafeguardsManagement Performance and Follow-up ................................................ 27 G APPENDICES . H MAPS: IBRDNo.35629 . This document has arestricteddistribution andmaybe usedby recipientsonly inthe performanceo ftheir official duties Its contents maynot otherwisebe disclosedwithout World Bank Group authorization . . This document has a restricted distribution and may be used by recipients only in the performance o f their official duties. Its contents may not be otherwise disclosed without IFC authorization. ListofAppendices Appendix 1:ResultsFrameworkandMonitoring.................................................................... 28 Appendix 2: DetailedProjectDescription............................................................................... 34 Appendix 3: SummaryofProjectCosts................................................................................... 47 Appendix 4: EconomicAspects............................................................................................... 53 Appendix 5: ImplementationArrangements............................................................................ 54 Appendix 6: ProcurementArrangements................................................................................. 64 Appendix 7: FinancialManagementArrangements ................................................................ 95 Appendix 8: MonitoringandEvaluationArrangements........................................................ 108 Appendix 9: SecurityRiskAssessmentandmappingofroads ............................................. 112 Appendix 10:Communications Strategy............................................................................... 117 Appendix 11:Environmentaland SocialManagementFramework...................................... 123 Appendix 12: Communitybasedcontracts and Social inclusionactivities........................... 139 Appendix 13:PoppyCultivation............................................................................................ . . 143 Appendix 14:ActionPlanfor EnhancingTransparencyandAccountability........................ 158 Appendix 15:EvidencefromNRVA 2005............................................................................ 162 Appendix 16:ProjectPreparationandSupervision............................................................... 170 Appendix 17:Documentsinthe Project File......................................................................... 172 Appendix 18:StatementofLoans andCredits ...................................................................... 173 Appendix 19:Countryat a Glance......................................................................................... 175 ListofTables Table 1:FinancialContributionsas ofAugust 2007 ................................................................. 4 Table2: ProvincialDistributionofNRAP................................................................................. 5 Table 3: NRAP Achievementsas of August 31. 2007............................................................... 6 Table4: NERAP-Rehabilitationworksproposed. ministry........................... Summaryper 13 A. BACKGROUNDAND STRATEGY 1. Project Rationale 1. The parliamentary andprovincial elections o fNovember 2005 brought the culminationof the political transformation for Afghanistan that had commenced with the Bonn Agreement in 2001, forming the basis for state-building and development in a country emerging from nearly three decades o f conflict and political turmoil. 2. Afghanistan's progress in many sectors has been impressive: development o f road networks has reduced travel times and improved rural access; school enrolments have reached historic highs; health facilities are gaining outreach; thousands o frural communities have been mobilized for development; commercial banks have opened up for business; and microfinance programs have extended services to thousands, mainly women. Real GDP, excluding poppy production, i s preliminarily estimated to grow by 8 percent in 2006107 (SY1385) after increasing by 29 percent in2002103, 16percent in2003/04, 8 percent in2004105, and an estimated 14percent in2005106 (SY 1384). However, the situation is far from normalized and Afghanistanhas not fully emerged from conflict. There i s concern that the security situation i s deteriorating in many parts o f the country and that it i s hampering development efforts, particularly ineducation and health. 3. Nearly 80 percent o f Afghanistan's people live inrural areas. The incidence o f rural poverty remains high as the country recovers from the long-term effects o f the nearly thirty years o f conflict and a recently ended six-year drought. One o f the sources o f rural poverty i s lack o f rural access, which constrains the transition from opiumpoppy cultivation to licit rural livelihoods, and thus the WorldBankhas supportedthe provisiono fruralroads to improve rural accessibility. 4. The proposed project, which would be called the National Emergency Rural Access Project (NERAP), will help to improve accessibility, integrating the village economy with regional and national markets, leading to better allocation o f resources, technology transfer, and higher productivity and outputs. It may also facilitate the expansion o f rural non-farm activities. Households who can diversify their income sources will become less economically vulnerable and less dependent on opiumpoppy cultivation. 2. Government Strategy 5. The Transitional Islamic State o f Afghanistan launched the National Emergency Employment Program (NEEP) in2002 as one o f four National Priority Programs designed to provide targeted social protection for vulnerable groups throughout the country and to rebuild the rural road infrastructure. 6. Today the National Rural Access Program (NRAF'), earlier known as NEEP, i s the Government's comprehensive rural access program. NR4P covers all 34 provinces. It i s a multi- donor program executed jointly by the Ministry o f Rural Rehabilitation and Development (MRRD) and the Ministry of Public Works (MPW). The United Nations Office for Project Services (UNOPS), as ImplementationPartner (IF') provides support for project implementation.. Works are carried out by local contractors and communities. 7. In addition to NRAP, the Ministry o f Rural Rehabilitation and Development itself implements rural access activities with funding from the European Commission (EC) and the Counter-Narcotics Trust Fund (CNTF), and, for Helmand Province, from the UK Department for International Development. The rural roads sector also receives funding from the provincial reconstruction teams but on an autonomous basis that complements the peacekeeping operations inAfghanistan. 8. Financing for NRAP has come mainly from IDA grants, the Japan Social Development Fund (JSDF), and donor contributions that are channeled through the Afghanistan Reconstruction Trust Fund (ARTF). The government has provided funds from the World Bank funded Programmatic Support for Institution Building project. Donors contribute to NRAP because o f its proven delivery record, its ability to reach all provinces, and its flexibility, through the implementing agencies, to respond to donors' geographical preferences. Donors include AUSAID (Australian Aid), CIDA (Canadian InternationalDevelopmentAgency), DFID (Department for International Development), and USAID (United States Agency for InternationalDevelopment); their funding all follows the same arrangements-which facilitates donor coordination and allows implementation efficiencies. 2 m !I 0 0 N w Donor Amount (US$ million) ImplementingPartner ARTF-NEEP 1 16.6 UNOPS EC 10.6 MRRD JSDF 19.6 UNOPS PSIB 15.0 UNOPS WB-LIWP 14.2 mops WB-NEEPRA 39.2 UNOPS USAID through UNDP 3.1 UNOPS CNTF" 5.3 MRRD DFID (for Helmand) 15.4 UNOPS ARTF-NEEPRA 36.2 UNOPS JSDF - LIWP 2.0 CARE Total 177.2 Source: NRAPQuarterly ProgressReport, June 2007. aMRRDis not involvedincounter-narcotics operationsbutreceives finding for roadrehabilitation from CNTF incases where roadbudilingandthe employment NERAPbringsare believed to be o fstrategic significance to delivering counter narcotics outcomes. 9. NRAP i s expected to require a budget o f about US$500 million over the next five years to achieve the objectives o f the Afghanistan National Development Strategy (ANDs) to be finalized inMarch 2008. CIDA, EC, Sweden, and USAID have already indicatedtheir interest to provide additional funding through the ARTF. It i s hoped that other donors will make significant contributions towards that objective and the majority i s expected to flow through the ARTF. Donors contribute to NRAP because o f the proven delivery record, its ability to reach all provinces, and its flexibility, through the implementing agencies, to respond to geographical preferences o f the donors. Due to varying donor budget cycles and payment procedures, the timing of contributions is unpredictable, making it necessary to frequently amend the grant agreement and the IPcontract. 10. The Government'program has been implemented through four major projects assisted bythe World Bank: The Emergency Community Empowerment and Public Works Project (2002- 04; IDA funding US$16.78 million) which provided employment in rural areas at a minimum wage, as a safety net, through the sustainable rehabilitation o f irrigation capacity and provincial and district-levelroads. The National Emergency Employment Program-I (2002-ongoing, planned closing date March 31, 2008, with Afghanistan Reconstruction Trust Fund (ARTF) fundingo fUS$51.9 million) was launched to provide bridge funding untilthe: National Emergency Employment Program for Rural Access (NEEPRA) was prepared (2003-closed September 30,2007; IDA fundingUS$39.2 million). Both o f these projects were initially designed to provide targeted social protection and strengthen key rural access infrastructure, so as to improve the livelihoods o f the rural poor through: (i) emergency short-term employment on labor-based works; and (ii) technical assistance for program implementation. 4 The National Emergency Employment Program for Reintegration and Alternative Livelihood (2004-08; Japan Social Development Fund Grant, US$19.6 million, administered by the World Bank) supports the reintegration o f ex-combatants into society and also contributes to the Government's Alternative LivelihoodProgram in poppy producing areas. It seeks to create opportunities for employment and development o f vocational training and business management skdls for the beneficiaries. 11. Government also provided funds from the World-Bank funded Programmatic Support for Institution Building (PSIB) project. These contributions have been implemented in accordance with the project documents formulated for NEEPRA. 12. The achievements o fNEEP/N" upto August 31,2007 have been impressive: the program has improved nearly 10,000 km o f roads inall 34 provinces. It has created more than 13 million labor days and has provided tangible benefits to the rural population in the form o f wages and improvedinfrastructure. Results are summarized inthe tables below: Table2: ProvincialDistributionofNRAP Source: NRAP Monthly ProgressReport, updated August 31,2007. Note: Central Highlands: Bamyan, Wardak, Daykundi; East: Nangarhar, Laghman, Kunar, Nuristan; Kabul: Kabul, Parwan, Logar, Kapisa, Panjshir; North: Balkh, Samangan, Saripul, Faryab, Jowzjan; North East: Kunduz, Baghlan, Takhar; South: Kandahar, Nimroz, Zabul, Urozgan, Helmand; South East: Paktiya, Paktika, Khost, Ghazni; West: Herat, Ghor, Farah, Badghis. 13. In its early days, the program was more diverse than it now is. In addition to financing the rehabilitation o f rural roads, funding was provided for 748 irrigation schemes, 965 wells, 89 water reservoirs and water supply networks, 95 schools, 15 clinics, 135 shelters, 41 other buildings, and 29 plant nurseries. In addition to road rehabilitation, NEEPRA financed the rehabilitation o f eight provincial airfields and the construction o f the MRRD headquarters in Kabul. The bulko f funding, however, has been for roads and associated structures. Tables 2 and 3 give details o f achievements. 5 Source; NRAP Quarterly report, June 2007 updated August 31,2007 14. While NEEP was initially intended to provide a safety net, inpractice the activities were not as well targeted to the vulnerable as expected: nearly four out o f five poor households had no workers employed in the program, and nearly one in five o f the workers who were employed came from relatively wealthy households. An analysis o f NRVA 2005 data shows that 78 percent and 76 percent o f the poorest households were not participating in cash-for-work or food-for- work programs respectively. The same data also showed that 17 percent o f the participants inthe cash-for-work programs and 16 percent in the food-for-work programs came from the richest 20 percent o f households. See Appendix 15: Evidence from NRVA 2005 for the findings of the analysis. Reasons why targeting did not succeed as well as hoped, include the complexity o f Afghan rural society, the exclusion o f women from public works, and the absence o f social mobilizers who could have facilitated the process. 15. By providing better rural access, NRAF' i s making a significant contribution to achieving the overall vision o f the Islamic Republic o f Afghanistan, to "consolidate peace and stability through just, democratic processes and institutions, and to reduce poverty and achieve prosperity through broadbased and equitable economic growth." 16. The government is defining an Afghanistan National Development Strategy (ANDs),which i s to be finalized in March 2008. The need for long-term engagement by the international community in Afghanistan was reaffirmed at a high-level donor conference, held in London in January 2006, which launched the "post-Bonn" agenda for the country. A significant feature o f this agenda is the Afghanistan Compact concluded between the government and the donors, which identifies 27 benchmarks to be achieved within the next five years. The benchmarks are drawn from the government's Interim Afghanistan National Development Strategy (LANDS), which aims to "provide tangible benefits to the population." Those that relate specifically to rural roads are: (i) by end-2010, provision o froad connectivity would reach 40 percent o fthe country's approximately 38,000 villages, thereby increasing access to markets, employment, and social services; and (ii) Afghanistan will have a fiscally sustainable system for road maintenance by end-2007. Certainly the achievement o f the second benchmark i s not yet insight. 6 17. The Government does not have yet a well-defined rural access policy and strategy. The World Bank and other donors have maintained a dialogue with the Government on the options that could make NRAP even more effective. Based on a rural access policy review that the World Bank carried out the in June 2007, Government i s assessing its options and it i s expected that the guiding principles o f a rural access policy will be proposed during a policy workshop to be held inKabul inlate 2007. A rural access policy and strategy would then be developed during the first year o f the proposed project with the support and assistance o f specialized consultants. This policy formulation work would also help the Government to ensure that the strategies that MRRD and MPW are currently defining under the ANDs process explore synergies between rural development and rural access. 18. Government also intends to use the late 2007 policy workshop to launch the next phase o f NRAP, based on a realistic estimate o f donor funding. Though NRAP thus far has successfully mobilized funds, donors' varying budget cycles have meant that the timing o f contributions has been unpredictable, leading to frequent amendments o f grant agreements and o f the contract o f the Implementation Partner. Government intends to make the approach more systematic by intensifyingits relationships with donors. 19. Over the next five years NRAP is expected to require a budget o f US$500-550 million equivalent, to achieve the objectives o f the ANDs. This estimate includes the cost o f a backlog o f maintenance activities from the current phase o f the program. The NRAP budget i s expected to be financed through IDA, ARTF, JSDF, and other bilateral resources. CIDA, EC, Sweden, and USAID have already indicated their interest in providing additional funding through the ARTF and it i s hopedthat other donors will follow. 20. The poppy economy presents a formidable challenge to development and security. Government i s committed to mainstreaming efforts to counter poppy production through all its national programs. Experience from other opium producing countries such as Pakistan, Thailand, and Laos shows that high costs o f transporting legal goods are a major constraint on moving out o f opium poppy cultivation and that improving rural access serves to reduce these costs and to facilitate trade, as well as making law enforcement easier. Usinglabor-intensive methods o f road construction will ensure that NRAP also generates legal job opportunities in poppy growing areas. A mapping exercise carried out during project preparation identified the localities o f proposed roads in relation to poppy growing areas. The World Bank Guidelines, "Treating the Opium Problem in WB Operations in Afghanistan," have been adapted for the proposed project and are also intended to provide a framework for NR4P. B. BANKRESPONSEAND STRATEGY 1. The RuralAccess Policy Note 21. The World Bank has supported NEEP/NRAP since its inception and considers that the projects are malung a successful contribution to rural development inAfghanistan. Following the government's October 2006 request to expand World Bank support to NRAP, the Bank began preparing the proposed project by undertakmg a sector policy review, which it shared with the government and key stakeholders inJuly 2007. 22. Government and the World Bank agree that the key problems affecting the provision o f rural access are the following: First, a national priority program is being implemented without a 7 policy framework. Second, there is no effective coordination between the providers and beneficiaries o f access infrastructure, and the prioritization o f rural road investments is not sufficiently transparent or impact-oriented. Local, district, and provincial authorities, ministries that rely on rural roads (education, health, agriculture, etc.), and the provincial reconstruction teams need to be more systematically involved indecision making. Efforts to achieve this needto be complemented by the development o f a knowledge base on rural access needs and the state o f the road network. Third, MRRD and M P W need to determine the most efficient and effective delivery mechanism for rural access, to distinguish their own core functions from functions that they could outsource, and to decide on the appropriate level o f deconcentration (i.e. how many o f their staff should be posted inthe provinces, with what functions). Fourth, based on the technical standards the program i s now using, the average cost o f rural road rehabilitation inAfghanistan i s US$55,000 per km o f secondary roads for MPW and US$29,000 per km o f tertiary roads for MRRD.With the currently available annual fundingestimatedat US$35 million and arural road network estimated to be bigger than 100,000 km, it could take up to a century to upgrade the entire network. An approach that i s targeted to providing basic year-round access at the lowest acceptable level o f service, and uses modem labor-based methods, whose costs per lulometer are lower, might be more appropriate. Labor-intensive methods would create more jobs for wage laborers and increase the opportunity costs to households o f using labor for opium poppy cultivation. Fifth, investments have not been accompanied by a strategy and funding for maintenance. Finally, so far no consideration has been givento gender aspects inrural access. 23. The Bank's sector policy review made five recommendations for short-term implementation, with support from the proposed project: (i) define a national rural access policy and then formulate a multi-year program for investment and maintenance o f secondary and tertiary rural roads; (ii)set up a coordination mechanism for planning and implementation that brings together different levels o f government, ministries, donors, and the provincial reconstruction teams; (iii) give priority to defining a strategy for rural road maintenance and its implementation; (iv) strengthen the decision malung processes for investment in rural roads: further develop the bottom-up planning and prioritization process, introduce decision making tools for road prioritization and investment programming, and make investment programming more transparent and better protected from the influence o f pressure groups; and (v) adopt an approach o fprovidingbasic year-round access at lower unit costs than the current approach, so as to benefit more people, and develop appropriate local technical specifications for this purpose. 24. Other recommendations, which need to be addressed in the medium term, are to: (i) clarify the institutional responsibilities o f MPW and MRRD and implement administrative reforms in these ministries, such as appropriate deconcentration and pay-and-grading; (ii) introduce modem labor-based techniques and make these the instrument o f choice for rural road improvements, particularly for the tertiary road network; (iii) enhance the capacity o f the public and the private sectors through pragmatic and targeted interventions; and (iv) assess gender needs in access provision. 2. Rationale for Bank Involvement 25. In May 2006, the World Bank Board o f Executive Directors discussed a new Interim Strategy Note (ISN) for Afghanistan, which guides the Bank Group's engagement for the ensuing two years, and i s aligned with the Interim National Development Strategy (IANDS). The ISN envisages a grant program o f up to US$540million over those two years, which is inline with the World Bank's five-year pledge o f US$1.2 billion made at the January 2006 London Conference. Under the ISN, the World Bank priorities are: (i) buildingthe capacity and accountability o f the state, (ii) improving rural licit livelihoods and promoting the rural economy, and (iii) supporting 8 the growth of a formal, modem, and competitive private sector. The proposed project is fully aligned with ISN, which states the Bank's intention to make additional funding available for infrastructure and rural development (p. 32). 26. The implementation o f the IDA-funded rural access projects in Afghanistan has been successful despite difficult circumstances. The projects have helped to improve the delivery o f services and access to markets across the country. Inthe process, a local contracting industryhas emerged and i s providing job opportunities in remote areas. The Bank has promoted a dialogue between donors and the government on policy matters, and the government is ready to engage in formulating a strategc program to address the key sector issues. Seeing the convergence o f interest in the sector, the World Bank i s in a key position to support this policy formulation process and to lead in the use o f a programmatic approach by government and its development partners for rural access provision. 27. Security is deteriorating across the country, and particularly in the southern and eastern regions, where project staff have become casualties or receivedthreats and warnings. Inaddition, criminal activities against staff, contractors, and offices are increasing. The escalation o f the insurgency is one o f the major risks o f the proposed project. A security analysis was carried out during preparation which focused on the risks and mitigation measures that would apply to the project. Strong community involvement was seen as a key factor to ensure their ownership and their ability to provide safe passage to project and contractor staff. Lessons from the ongoing projects show that often the communities are able to provide reliable security intelligence and that they are sometimes able to reach agreement with anti-government elements to ensure safe passage. A mapping exercise was carried out which shows the risk level associated with each road. Ministries will update these maps andprovide them to project staff on a regular basis. 28. If the security situation deteriorates further, implementation would be shifted to a community-contracting approach, so-called Level 1 contracts, which require minimal technical works. Such contracts require a higher degree o f social mobilization but can be carried out with less technical input and supervision. The advantage would be that Government services could still be delivered and a light Government development footprint can be maintained throughout the country. 29. The security situation would also limit the Bank's ability to carry out supervision o f works because many sites would be inaccessible. Bank would make use o f thirdparty reports, technical audits commissioned by the Government, and community feedback. Such a three-prong strategy i s considered sufficient and would be supplemented, wherever possible, by direct supervision. 3. LessonsLearned and Reflected inthe Design of the Program and the Project 30. Several key lessons have emerged from operations in a fragile state such as Afghanistan, and from the implementation o f NRAP itself. First, project implementation in a conflict affected environment, requires flexibility indeploying and re-deploying staff; good understanding o f local social structures; an ability to work with community leaders to ensure access to project sites and security; good capacity to manage and supervise community-based contracting, which, involatile areas, might be the most appropriate solution and the provision o f visible benefits to the population through short lead times, employment creation, and quality infrastructure. Second, rapid rotation o f staff on both the client and the Bank sides increases the need for robust fiduciary systems; but it i s difficult to attract to the country quality staff who can develop and update such systems. Third, the capacity o f client staff is weak and capacity buildingefforts needbe targeted to those staff involved in project implementation rather than to general capacity buildingfor the 9 ministries. Experience in Afghanistan with provision o f generalized technical assistance has had limited successbecause itwas not linked to measurableperformance improvements. 31. In addition, the Bank's FY07 Quality o f Supervision Assessment provided two valuable recommendations: First, "Keep it simple!'' Counties emerging from conflict generally face considerable damage to institutional capacity, social capital and relations, economic conditions and infrastructure, coupled with large numbers of donors and NGOs chasing projects and government attention. Under these circumstances, projects duringthe initial reconstruction period need to be kept as simple as possible, focusing on one or two key objectives and minimizing the institutional demands on incipient public sector administrations. Second, management expectations need to be realistic. Risk i s inherently higher in these contexts, and expectations need to be adjusted in line with what can be reasonably achieved in the initial reconstruction phase. C. DETAILEDPROJECT DESCRIPTION 1. Project Objective 32. The project development objective (PDO) o f the proposed project, derived from the overarching program objective o f N U P , i s to provide year-round access to basic services and facilities in the rural areas o f Afghanistan covered by the project. This will be achieved through rehabilitationand maintenance o f rural access infrastructure by contracting with the private sector and, to a lesser extent, with the communities. The achievement o f the PDOwill enhance the well being o f the populationand promote equitable licit economic growth inthe country. 33. The key indicators for monitoring the achievement o fthe PDOinclude: 0 After completion o f a road, travel time o f beneficiaries living along the improved road to the first available schools, health care facilities and administrative services would be reduced by 30%. 0 After completion o f a road, the number of trips taken by beneficiaries living along the improved road to district centers would increase by 30%. 0 Prices o f key consumption and production commodities at beneficiary villages would be within 15% o fthe priceinthe nearest town. 34. Further, though reductions inopium poppy cultivation will depend on a number o f different factors outside the scope o f the project, it i s proposed to monitor the impact that the completion o f project interventions has on agricultural diversity inareas where opium poppy i s currently grown. 2. Project Description 35. The estimated total cost o f the proposed project i s US$137 million. The IDA grant allocation o f the proposed project is US$112 million equivalent and the Government has committed itself to finance the remaining US$25 million from its own resources or from donor funding. This 36-month project would finance about 20-25 percent of the total estimated cost o f the NRAP inthe next five years. 10 36. The lending instrument proposed i s the Emergency Recovery Grant (OP 8.50) which, under the ISN, has been used for World Bank initiatives in Afghanistan. Although IDA'S new operational policy on rapid response (OP 8.00) i s in effect, since the project the Project Concept Review meeting took place before March 1, 2007, the previous OP 8.50 i s applied to ensure continuity inproject processing. 37. The proposed project builds on the successful design and implementation o f the previous IDA-funded projects. So far, project implementation has largely been the responsibility o f the Implementation Partner. At this point there is no feasible alternative to this approach, but the proposed project will explicitly aim to reduce the ministries' dependence on technical assistance, as detailed in the Project Implementation section below. Before the project's mid-tern review, the Bank team will reassess the capacity o f ministry staff with a view to increasing their responsibility for implementation. Additionally, the proposed project will aim to involve local communities by liaising with social inclusion officers inthe different stages o f sub-project design and implementation, in order to leverage their local knowledge, improve delivery, enhance security, andavoid delays due to land disputes. 3. ProjectComponents 38. The proposed project has three components: (A) improvement o f secondary roads by the Ministryo f Public Works (MPW); (B) improvement o f tertiary roads by the Ministry o f Rural Rehabilitation and Development (MRRD); and (C) institutional strengthening, project management and program development. Details of the project components and activities included in each component are presented in Appendix 2: Detailed Project Description and costs are detailed inAppendix 3: Summary o f Project Costs. 39. Component A. Improvement o f secondary roads (US78.2 million including contingencies and taxes o f which IDA will finance US53.2 million equivalent). This component to be implemented by MPW has four sub-components: (i) rehabilitation and reconstruction o f about 1,075 lulometers o f secondary rural roads (about 770 kmunder IDA financing and some 305 km under GOA financing). MPW's overall investment program was agreed at appraisal and 80% are considered confirmed. Some road works will be implemented under retroactive financing. The investment program i s presented inAttachment 1o f Appendix 2. The road selection was largely based on discussed and agreed criteria which are shown in attachment 3 o f Appendix 2. These include increasing access to isolated populated villages, many o f which may be highly poppy dependent, to the road network to facilitate delivery o f public and social services and access to markets. IDA funding complements the ongoing programs financed under ARTF and takes into account as much as possible global equity parameters to ensure balanced investment proposals between the secondary and tertiary roads and equity amongst regions, provinces and districts. This component includes also (ii) financing a provisional amount o f US$2.5 million equivalent (base cost) to address emergency repair works to roads and bridges following natural disasters such as heavy snow, rocks falls, landslide and rocks blockage, heavy rains and flooding. Specific criteria were defined at appraisal (covering e.g. proven exceptional event, re-opening o f roads to linkisolatedareas, blockage o fheavy traffic roadwithout possibility o froad deviations) and will be included as eligibility criteria for emergency maintenance in the legal agreement; (iii) environmental and social sector management, monitoring and evaluation, this includes provisions for monitoring the updated Environmental and Social Management Framework (ESMF) and activities that involve community participation; and (iv) project implementation assistance: services o f an implementation consultant and financial contribution to incremental operating expenses requiredto runthe program implementationunit of MPW, including project allowances for civil servants. 11 40. Component B. Improvement o f tertiary roads (US$52.1 million including contingencies and taxes o f which IDA will contribute US$52.1 million equivalent). This component to be implemented by MRRD has five sub-components: (i) rehabilitation and reconstruction o f about 925 kilometers o f tertiary rural roads. The project will aim at promoting the development o f a professional labor-based contracting industry which is particularly suited for tertiary road improvements. MRRD's investment program was agreed at appraisal and i s considered 80% confirmed, see Attachment 2 o f Appendix 2. A part o f the rehabilitation program will be carried out under retroactive financing. The road selection was largely based on discussed and agreed criteria. These include increasing access to isolated populated villages, many o f which may be highly poppy dependent, to the road network to facilitate delivery o f public and social services and access to markets. IDA funding complements the ongoing programs financed under ARTF and takes into account as much as possible global equity parameters to ensure balanced investment proposals between the secondary and tertiary roads and equity amongst regions, provinces and districts; (ii) financing a provisional amount o f US$2.5 million equivalent (base cost) to address emergency repair works to roads andbridges following natural disasters such as heavy snow, rocks falls, landslide and rocks blockage, heavy rains and flooding. Specific criteria were defined at appraisal (covering e.g. proven exceptional event, re-opening o f roads to link isolated areas, blockage o f heavy traffic road without possibility o f road deviations) and will be included as eligibility criteria for emergency maintenance in the legal agreement; (iii) carrying out a routine maintenance program mainly on the already rehabilitated roads under the NEEP1 and NEEPRA which will cover the initial estimated financing need for a period o f twelve to eighteen months (some US$7 million equivalent base costs). MRRD i s currently carrying out a maintenance pilot operation consisting o f eight roads covering 53 lan which includes routine, periodic and emergency maintenance and the results obtained are promising. Communities were contracted to carry out routine and periodic maintenance works and contractors were hired for the emergency works. It was agreed during appraisal to implement this sub-component through the National Solidarity Program (NSP) which leverages synergies o f these two priority programs. The Facilitating Partners (FP) o f the NSP will provide technical advice to the communities and the Community Development Councils (CDC) will be the entry point for community contracting for routine maintenance works; (iv) environmental and social sector management, monitoring and evaluation, this includes provisions for monitoring the updated Environmental and Social Management Framework (ESMF) and activities that involve community participation; and (v) project implementation assistance: services o f an implementation consultant and financial contribution to incremental operating expenses required to run the project implementationunit o f MRRD. 12 Table4: NERAP-Rehabilitationworks proposed-Summaryper ministry Islamic Republic ofAQhanistan NERAP Rehabilitationworks - Summary perMinistry (Base costs inUS$ million) Secondary Roads (Ministry o f Public Works) 58.3 1,081 658 0.054 Tertiary roads (Ministryof RuralRehabilitationand Development) 27.0 929 8,201 0.029 Total 85.3 2,010 8,859 0.042 ** Rm:runningmeters o f culverts, retaining walls and bridges to be rehabilitated 41. Component C. Institutional strengthening, project management and program development (US$6.7 million including contingencies and taxes o f which IDA will contribute US$6.7 million equivalent). This component, to be implementedby MRlZDincoordination with MPW, has three sub-components: (i) Rural roads management system including support for: (a) the development o f a rural access strategy and its implementation through a national prioritized investment program for the next five years to be presented to the donors by Mid Term Review; this will include an assessment as to how N E W may be able to maxmises the Counter Narotics Outcomes o f its interventions; and (b) the setting up o f maintenance mechanism, maintenance programming for the short and medium term and support for its first year o f implementation, and routine and emergency maintenance works. In addition and in conformity with the road management strategy, this sub-component will also finance (ii) capacity building activities for staff who will be tasked to manage the rural road sector, e.g. road network management (identification o f a core rural road network, definition o f appropriate service levels, data collection and analysis, and appropriate economic appraisal techniques), public procurement, financial management, upgrading o f engineering shlls, reporting, and geographic information systems. The project will finance internships for at least 100 engineering students and ten community development/social inclusion students annually. It is also planned to develop a program for managerial level staff who would receive on-the-job training in roads agencies in other countries. This sub-component will also include capacity buildingfor contractors (national works contractors and engineering firms) which would target on-the-job training and business s h l l s (bidding, contract management and community contract management, conflict resolution, works organization, and technical aspects); and (iii)Project management, monitoring and evaluation and analysis o f data for reportingpurposes. 4. Risks 42. The proposed project is a highrisk - highreward operation. While some o f these risks can be mitigated through measures incorporated in project design, others can only be closely monitored and adjustedto, on a continuous basis. 13 43. Security is deteriorating across the country, and particularly in the southern and eastern regions, where project staff have become casualties or receivedthreats and warnings. Inaddition, criminal activities against staff, contractors, and offices are increasing. The escalation o f the insurgency is one o fthe major risks o f the proposedproject. 44. The key operational risks are presented below, while Appendix 9: Security RiskAssessment and mapping of roads provides a more comprehensive security risk analysis. Appropriate mitigation measures have been incorporated inthe project design to address these risks. 0 Risk that security conditions will deterioratefurther, notjust in the south and east where it is virtually impossible to operate, but more widely throughout the country. Until 2006 the level o f conflict in the country was generally manageable and did not slow down the rural roads program. But in early 2006 the situation started to deteriorate and NRAF' had to adjust its delivery mechanism. In certain areas, contractors and nationalhnternational staff are no longer able to work. Mitigation measures include taking into the area's risk level in roads selection (see Appendix 9: Security Risk Assessment and Mapping o f Roads which shows that 75% o f the proposed roads proposed are in low risk areas; working closely with the Community Development Councils (CDCs) or shurahs to ensure community commitment and ownership, negotiate for safe working conditions or switching to community-based contracting. Such contracting will be for basic road improvement and will not require advanced engineering skills. Contract modalities will be advertised in public places for community members to have easy access to this information and to ensure transparency.. 0 Risk that qualiJied national stafand contractors will not be available. Afghanistan has a very limited slulls base due to the prolonged conflict andthe slow return o f qualifiedpeople. The scarce availability o f qualified engineers, fiduciary specialists, and technical staff i s exacerbated by a crowding out effect fkom the emergmg private sector and generously funded donor projects. Mitigation measures include an implementation unit that can offer reasonably competitive salary and benefits packages, an attractive work environment and on the job training through components A and B. The number o f qualified contractors i s low and international companies are not setting up permanent local subsidiaries. The market i s beginning to be saturated by donor funding and contractors are hesitant to work in higher risk areas. The project will aim to mitigate these risks by tailoring procurement packages that are compatible with contractor capacity and by building up the contracting industry through management and technical training providedunder component C. 0 Risk that Ministry of Public Works and Ministry of Rural Development prefer to set up separate rural roads department, duplicate efforts, and fragment sector coordination. Currently MRRD and MPW have divided their interventions on rural roads based on a memorandum o f understanding (MOU) but the detailed responsibilities should be clarified. So far, coordination i s reasonably well ensured by the PDCU but the unit i s a rather weak structure and MRRD has already set up a Rural Roads Department. This might lead to an unnecessary increase o f cost at the management level and uncoordinated interventions, esp. at district level. Mitigation measures have been built into the project design. Component C includes technical assistance for a rural access strategy and framework which i.a. will make recommendations on realignment network responsibilities in view o f local (rural) connectivity (MRRD) and strategic connectivity (MPW). Strong leadership i s necessary to ensure coherent sector planning and management, development and applications o f standards to avoid over-investments, etc. 14 Risk that ministries will resist the downsizing of personnel. Under previous projects MPW and MRRDhave taken advantage o f relatively liberal staffing policies. An account in June 2007 showed that 700 staff were on the payroll o f the NEEP cluster. Staff included international consultants, national consultants, and civil servants from all positions. Over time, several layers o f project management were created, for example MPW and MRRD program coordinators, chief and deputy chief coordinators o f the Program Management and Coordination Unit (PDCU), director and deputy directors o f the project implementation units o f MRRDand MPW. The national consultants inthe central and regional PIUs have national counterparts who presumably are there for capacity buildingpurposes. Some staff work full time on the program, some work part time, and other do not contribute at all. Agreement was reached during project preparation that under the proposed project staff levels would be adjusted to the requirement o f the actual workload. Only staff contributing to the program should be on the payroll and a normative yearly ratio o f staff cost to works has been agreed for bothministries duringappraisal. 0 Risk onpoor Governance and lack of anti-corruption measures. Afghanistan i s considered a high risk fiduciary country. Each project i s designed to make adequate arrangements to minimize the risk o f corruption and to promote the establishment o f good governance systems in the concerned line ministries. The public works sector i s generally considered a high risk environment and interviews with staff and contractors were carried out during project preparation to learn lessons from the ongoing projects, funded by the World Bank and other donors. The interviews confirmed that corruption i s a problem outside the NEEP cluster. Furthermore a review o f project management capacity in MRRD, focused on the PIU, highlighted the need to further strengthen the governance system in the ministry. Global experience on community based contracting has shown that when communities manage funds there i s a high level o f transparency and good record keeping. The routine maintenance component would be implemented through the CDCs. The proposed project will put in place transparency, accountability and anti-corruption mitigation measures (see Appendix 14: Action Plan for Enhancing Transparency and Accountability). These include mainly but not limited to: (i) outsourcing o f key steps in the procurement and contract management process to an Implementation Consultant, (ii) technical and financial audits, and (iii) community information and reporting back, and World Bank supervision. In the past, communities have received little or no information on the cost o f road works and it i s proposedto provide them with information on costs, design and material quantities. D. INSTITUTIONALARRANGEMENTSAND PROJECT IMPLEMENTATION 1. InstitutionalSet up 45. The NEEP cluster o f projects and the Government's NRAP has been successfully implemented by the PDCU with the support o f an implementation partner (IP). The PDCU coordinates the program on behalf the Ministry o f Public Works (MPW) and the Ministry o f Rural Rehabilitation and Development (MRRD) with the help o f two program implementation units (PIUs). The PDCU had a far reaching mandate o f joint budgeting, planning and programming, and reportingto Government and the donors but many o f these functions have only been partially fulfilled. The two ministrieshave cooperatedreasonably well on rural roads but the work programs have been carried out inparallel, as should be expected. 15 46. Inthe interest o f strengthening the coordinationbetween line ministries and to set the course for sustainable rural road management, it was agreed to dissolve the PDCU and to retain the PIUs for project implementation. At a latter stage, the MRRD PIU might be mainstreamed into the Rural Roads Department recently created within the ministry or even absorbed into a roads agency, if such an entity was to be created. The figure in Appendix 5: Implementation Arrangements presents the proposed institutional set up clearly distinguishingthe responsibilities for project oversight, coordination and monitoring; and implementationand management. 2. ImplementationArrangements ImplementationPeriod 47. Project implementation period. The proposed project would be implemented over three years and four fiscal years (World Bank) from January 1,2008 to December 31,2010. Capacityofthe Governmentto Executethe Project 48. As noted above, government has expressed a strong interest to take over responsibility for program and project implementation from the Implementation Partner. To accomplish this, transition arrangements are needed to empower staff and improve their decision mahng capacity. Further,inthe interest o fenhancing the government's presence throughout the country, ministries consider it essential to be given greater visibility. The World Bank, appreciating the interest o f the ministries, inparticular MRRD, intahng over responsibility for project implementation, has proposed an arrangement that seeks to match the ministries' expectations while ensuring that the Bank's fiduciary requirements can be met. During project preparation, it was agreed with the government that the services o f an Implementation Consultant will be required to ensure the smooth and rapid implementation o f the project. The I C recruitment i s a condition o f effectiveness. The I C i s beingrecruited on a competitivebasis and will support bothministries, as described below. The terms o f reference o f the I C clearly reflect the goal o f preparing the ministries to take full responsibility, and include specific on-the-job training targets for the ministries' staff. For the ministriesto take full responsibility for implementation from the I C will require the definition o f permanent institutional arrangements for rural roads management, such as a functional rural roads department or agency. In addition to the IC, a Capacity Building Consultant will be engaged to assist inthe development o f a rural roads management system and formal training o f staff. These are described below and detailed inAppendix 5: Implementation Arrangements. ProgramandProjectImplementationandManagementStructure 49. Project oversight. An inter-ministerialSteering Committee (SC), chaired by the Minister o f Finance (or his representatives) and comprising ministers (or their delegates) o f MPW, MRRD, and other line ministries involved as the main beneficiary ministries in the project (agriculture, basic education, health, counter narcotics etc.), will be responsible for the overall policy, strategic planning and project oversight and for integrationwith other rural development programs. Donors will be permanent members o f the SC. Other observers such as local authorities, donors, and experts may be invitedto attend the SC meetings as required. The SC will meet twice a year and on an ad hoc basis when required. To facilitate the work o f the SC, the National Coordination Unit(see below) will functionasthe secretariat. 50. Project coordination and monitoring. The following institutional arrangements have been agreed upon, tahng account o f the emergency nature and strategic importance o f the project and 16 the still limited capacity o f the ministries for fiduciary, technical and monitoring aspects. These arrangements are expected to ensure that funds disburse quickly, multi-sector objectives are reached, and transparency i s maintained. 51. A small and efficient National Coordination Unit (NCU) i s being set up by ministerial decree in the Ministry o f Finance and will be responsible for the overall coordination o f NRAP, including the proposed IDA-funded project. In particular, the N C U will ensure donor coordination, which will be a key element o f a sustainable multi-year programmatic approach. It will also work in coordination with the program implementation units and other relevant ministries and agencies involved in rural development. The unit will be headed by the National Coordinator-a full-time project administrator (a senior project management specialist, the recruitment on a competitive basis i s ongoing) who will be responsible for day-to-day coordination o f the project. The unit will (i)monitor and evaluate the overall project implementation and provide regular consolidated reports on progress to the SC; (ii) assure steady progress in accordance with an implementation schedule reviewed and approved by the World Bank; (iii) monitor the contract obligations o f the I C and the Capacity Building Consultant to ensure adequate and smooth transfer o f shlls to national staff, and (iv) ensure the maintenance o f a highethical standard and transparency. The N C Uwill also serve as the secretariat o fthe SC. 52. To assist with coordination, a worhng group chaired by the National Coordinator and composed o f the focal points o f beneficiary ministries and implementing bodies (PIUs and IC) will be established. This worhng group will meet regularly, and at least monthly, to ensure adequate technical coordination and communication between ministries and implementing entities at the implementation level. 53. Project management and implementation. At this stage and based on the assessment o f ministries capacities, it i s proposed that: (i) MPW will implement Component A. For the civil works part, it will delegate most o f the implementationresponsibilities to the IC which will be in charge o f implementing the investments under the overall responsibility o f MPW. Non-works activities will also be implemented by the IC untilthe MTR, while MPW is buildingits capacities with the support o fthe requiredexpertise (initially recruited under PPF financing) and training o f the newly recruited fiduciary staff; (ii) MRRDwill implement activities under; (i) Component B; and (ii) coordination with MPW, Component C. For the civil works part, it will delegate most in o f the technical and fiduciary responsibilities to the I C which will be in charge for the implementation o f the investments under the overall responsibility o f MRRD. Non-works activities will be managed by the PIUMRRD and implemented by the functional departments o f MRRD with the support of the required expertise (initially recruited under PPF financing) and training o f the newly recruited fiduciary staff. The agreed upon responsibilities o f the I C are detailed inAppendix 5: ImplementationArrangements. Prior to the mid-term review the Bank's team will reassess the capacity o f the ministry's staff and, if possible, the role o f the ImplementationConsultant will be reduced. 3. Procurement 54. With Donor assistance, Afghanistanhas made considerable efforts to establish the Legal and Regulatory Framework for public procurement over the last five years. A new Procurement Law, reflecting international best practice in public procurement was enacted in November 2005 replacing the earlier procurement regulations. While it provides a very modem legal system for procurement, effective implementation o f the law may encounter difficulties in the current weak institutional structure and capacity o f the Government. A Procurement Policy Unit (PPU) has now been established under M o F to ensure the implementation through the creation of secondary 17 legislation, standard bidding documents, provision o f advice and creation o f the necessary information systems for advertising and data collection. "Rules o f Procedure for Public Procurement" which details the better implementation o f the Procurement Law has been issued by MoF as circular number PPU/COO5/1386 dated April, 12 2007. The Procurement Appeal and Review mechanism i s in place and the Manual o f Procedures for "Procurement Appeal and Review" has been issued by M o F as circular number PPU/NOO1/1385 on March 18, 2007. 55. The special Procurement Commission, comprising Ministry o f Justice and Ministry o f Economy, under the chairmanship o f Minister o f Finance approves high value contracts. The current thresholds levels for: (i) Civil Works more than US$ 500,000, (ii) more than US$ Goods 100,000; (iii)Consultants more than US$ 200,000 and all contracts following Direct Contracting or Single Source Selection Procedure independent o f value. These thresholds are now being reviewedwith consideration for an upwardrevision thus decentralizing the authority to MoF. 56. In the absence o f adequate capacity to manage procurement activities effectively, some interim arrangements have been put in place to improve the procurement management o f the country. A central procurement facilitation service, ARDS PU has been established under the supervision o f Ministryo f Economy. 57. The Bank and the Government have agreed on a program for country wide procurement reform and capacity building, leading to the transition from centralized to decentralized procurement services. The Bank funded Public Administration Capacity Building project (PACBP) i s the primary instrument for implementing the program to strengthen capacity o f the line ministriesto manage public procurement inan effective, transparent and accountable manner. The envisaged radical changes to the procurement management environment expected from the new law also require the urgent implementation o f a comprehensive human resources and capacity development program. The implementation o f the procurement reform component o f the PACBP should be considered with due priority to ensure that fiduciary standards are further enhanced and that capacity i s developed in the Government to maintain these standards. A three year contract for procurement capacity buildingi s inplace under PACBP. This assignment should result in development o f critical mass o f procurement professionals through intensive and extensive training. The consultant's TORSinclude the development o f an accreditation system for procurement professionals. In addition, the law, procedures, procurement appeal, and review mechanisms need wide dissemination to the civil society to enhance transparency and accountability. 58. The proposed project will be implemented by two separate PrUs under the MRRD and MPW. The staff o f the PIUS have limited experience in handling procurement under IDA financed projects, inparticular civil works and it was therefore agreed with the Government that implementation (including procurement and financial management) o f the civil works, which are the major part o f the proposed project will be the responsibility o f the IC. In order to strengthen the capacity o f both ministries, training programs and recruitment o f individual international procurement specialists have already started (under PPF financing) and will be continued during the project. 59. Procurement for the project will be administrated in accordance with the World Bank's "Guidelines: Procurement under IBRDLoans and IDA Credits" dated May 2004, revised October 2006 "Guidelines: Selection and Employment o f Consultants by World Bank Borrowers" dated May 2004, revised October 2006 and the provisions stipulated in the Financing Agreement. In addition the The World Bank's "Guidelines on Preventing and Combating Corruption in Projects Financed by IBRD Loans and IDA Credits and Grants" dated October 15, 2006 has been shared 18 with the recipient. The Bank's Standard BiddingDocuments, Requests for Proposals, and Forms o f Consultant Contract will be used.Civi1 works and goods following National Competitive Bidding (NCB) procedures shall be procured using the agreed Standard Bidding Documents (SBDs) for Afghanistan. In case o f conflicthontradiction between the Bank's procurement procedures and any national rules and regulations, the Bank's procurement procedures will take precedence as per the Article 4(3) o f the Procurement Law o f the Islamic Republic o f Afghanistan dated October 2005. The general description o f various procurements under different expenditure categories are described inAppendix 6: Procurement Arrangements. 4. FinancialManagement,DisbursementandAudit 60. In Afghanistan's public sector, financial resources are, by and large, being used for their intended purposes as authorized by a budget that i s processed with transparency and has contributed to aggregate fiscal discipline. This i s the judgment that emerges from a public financial management performance-rating system recently developed for Afghanistan by the Public Expenditure and Financial Accountability (PEFA) multi-agency partnership program, which includes the World Bank, IMF, EC, and other agencies. 61. Financial management and audit functions for the proposed project utilize country systems centralized in the Ministry o f Finance and will be undertaken through the financial management and audit agents contracted under the ongoing Public Administration Capacity BuildingProject. This projectis the primary instrument for continuingto strengthenAfghanistan's country systems and other fiduciary measures that have been put in place for ensuring the transparency and accountability o f funds provided by the Bank and other donors. The Financial Management Agent i s responsible for helping the M o F maintain the accounts for all public expenditures, including IDA-financed projects, and for building capacity within the government offices for these functions. 62. At the project level, both the implementing line ministries, MPW and MRRD,will use the Implementation Consultant (the recruitment o f the I C i s a condition o f effectiveness) to perform the key financial management functions. Before the mid-term review, the Bank will assess the capacity o f the finance departments o f both ministries, and if this i s found satisfactory, they will assume full responsibility for the financial management functions. To help achieve this aim, the financial management capacity o f both ministries will be strengthened from the start o f the project by the recruitment o f FM professionals, regular training, and provision o f a financial management system. The I C will use a computerized accounting system, satisfactory to IDA, to maintain relevant accounting records and generate the required periodic reports on project activities. 63. Quarterly financial monitoring reports will be prepared by the IC/MRRD/MPW finance departments. Consolidated project reports will be prepared, reviewed, and approved by the MoF, supportedby the FinancialManagement Agent. 64. The Ministry o f Finance (MoF) will open and maintain a single, segregated Designated Account (DA) for US$16 million at Da Afghanistan Bank (the country's central bank) in the name o f the project on terms and conditions satisfactory to IDA. From the DA, an advance o f about US$6 million will be made available to a separate account, the Float Account (FA), managedby the IC for facilitating prompt payment under those parts o f the project (largely works components and the routine maintenance component) that the I C manages. Monthly withdrawal applications and expenditure reporting will be submitted. Financial management arrangements for the project are detailed inAppendix 7: FinancialManagement Arrangements. 19 FundFlows andDisbursement 65. Fund management for the project will follow existing procedures which allow for the advance to the Float Account managed by the Implementation Consultant. A s with all public expenditure, all payments under the project will be routed through MoF. The Financial Management Agent will assist the M o F in executing and recording project payments. The Designated Account will be operated by the Special Disbursement Unit (SDU) in the Treasury Department o f M o F and the Float Account will be managed by the IC. MRRD/MPW will request the SDU for payments fiom Designated Account funds. Inaddition to payments from DA funds, MRRDiMPW will be able to request the SDU to make direct payments to consultants or consulting firms and advances to the Float Account, and to request special commitments for contracts covered by letters o f credit. The Float Account will fund expenditures on works and routine maintenance grants via transfer to the block grants account under the National Solidarity Project. Such requests will follow World Bank procedures. All withdrawal applications to IDA will be prepared and submitted by MoF. 66. Disbursement management arrangements for the proposed project will follow standard World Bank procedures and be based on the best funds-flow arrangements possible, while worlung within the government's centralized payment system. The ongoing NEEP/NRAP experience shows that continued improvement in communication, planning, and troubleshooting between MRRD, Finance and Treasury, and the Special Disbursement Unit remains a priority, while for MPW, basic disbursement capacity building i s a priority. While the SDU will retain final authority over payment approvals, so as to ensure a smooth flow o f funds, MRRDwill need to be more proactive in managing its disbursements, ensuring better communication links with Treasury and World Bank counterparts, and improving transaction monitoring (exception reporting). The buildingblocks o f basic disbursement capacity will have to be builtwithin MPW. AccountingandReporting 67. A Financial Management sub-manual section o f the Project ImplementationManual will be prepared by the IC, within three months o f its appointment, documenting the financial management arrangements for the proposed project. The sub-manual will outline guidelines for project activities and establish a project financial management system in accordance with standard Afghan Government policies and procedures. This will include use o f the Chart o f Accounts developed by the Financial Management Agent (FMA) to record project expenditure. Project accounts will be consolidated centrally in MoF, through the SDU and supported by the FMA. Consolidated project financial statements will be prepared for all sources and uses o f project expenditures. Audit ofProjectFunds 68. The Auditor General, supported by the Audit Agent, i s responsible for auditing the accounts o f all IDA-financed projects. Annual audited project financial statements will be submitted within six months of the close o f GOA'Sfiscal year. The related projects, NEEP and NEEPRA have no over due audit reports and key issues raised in previous audit reports on these projects have beenresolved satisfactorily. RetroactiveFinancing 69. NRAP faces an acute shortage o f operational funds, as the result o f the delays in implementation and in ARTF funding. The Ministry o f Finance has indicated its readiness to 20 provide bridge financing untilthe proposed IDA grant becomes available and has made a budget inscription o f U S 2 5 million for MRRD and US16 million for MPW for this purpose. The Government and IDA have agreed to continue with the ongoing implementationarrangements, on an improved basis, and to use the current Implementation Partner, UNOPS to administer the retroactive financing for ongoing activities. World Bank policy gives an eligbility period o f up to 12 months prior to signing and for up to 40 percent o f Grant proceeds. For NERAP it is expected that the required period will be seven months prior to signing and the amount will be around U S 1 8 million or 16 percent o f the proposed grant. This amount has been established as the ceiling for retroactive financing under the project, at the Government's request. 70. The World Bank received on July 31, 2007 a formal request from the Ministry o f Finance for retroactive financing, including the amount, period, and nature o f the activities (works, services, operating expenses). Following the analysis o f staffing under NEEPRA, Government and the Bank have agreed on a revised staffing list which i s limited to staff actually worlung for the program. 5. Monitoring and Evaluation 71. The monitoring and evaluation (M&E) system for the NERAP is intended to provide informationto the relevant stakeholders on project implementationperformance, process, outputs, and outcomes. The monitoring information should also be used as a decision-malung tool by the project implementers. To track whether the NERAP i s meeting its objectives, key performance indicators have been developed (See: Appendix 1: Results Framework and Monitoring). Regular supervision and a mid-term review will be conducted by IDA to measure the achievements against these key indicators. 72. The project M&E system will be based on the following six aspects (see Appendix 8: Monitoring and Evaluation Arrangements for details): (a) implementation monitoring, (b) post- implementation monitoring, (c) community participatory monitoring, (d) baseline survey and impact evaluation, (e) Mid term review and (0 an external evaluation study at the end o f the project. 73. The M P W PIU will be responsible for monitoring implementation o f component A, while MRRD PIU will monitor components B and C. The M&E focal points of both PIUs will be responsible for coordinating the M&E tasks, liaising with the IC, as well as regional M&E staff and provincial engineers inthe collection and reporting o f the required data. The monitoring data will be continuously updated and consolidated quarterly for provision to the Bank and will be made available to coincide with the World Bank implementation support missions o f the project. Community Participatory Monitoring 74. Reflecting that focus will be placed towards the community-led management and maintenance, community participatory monitoring will be introduced. The social inclusion unit will ensure the participationo f beneficiary communities inthe implementationand monitoring o f Level 1contracts. Baseline Survey and Impact Evaluation 75. A baseline study will be carried out with the help o f the Vulnerability Assessment Unit (VAU) of MRRDin early 2008. The baseline survey will collect household level information on transport and travel needs, income and expenditures patterns, asset ownership, cropping patterns 21 (including opium poppy cultivation) employment as well as access to markets, health and education services. In order to identify the effects o f NEW projects on outcomes and to generate evidence-based recommendations on how the structure o f the program may be adapted to more efficiently meet program goals, a rigorous impact evaluation o fproject effects and related interventions will be implemented across the life-cycle o f the project.. The impact evaluation will focus on estimating two core effects: (i)Project Effects; and (ii) o f Complementary Input Effect Interventions (CII) (See Appendix 8: Monitoring and EvaluationArrangements, for details). Mid-term Review 76. A mid-term review (MTR) will be conducted during the second year o f the project, around June 30, 2009, in order to evaluate progress toward the project and program objectives and to identify measures to improve performance if needed.. The steering committee through the N C U will be responsible for preparing the necessary documentation for the review and for planning the MTR meeting. The review will evaluate progress in reaching the NEW and program objectives, and will identify measures to improve performance if needed. Prior to the mid-term review, a new capacity assessment o f technical and fiduciary management capacities o f the ministries will be carried out by the World Bank in order to assess the options to transfer additional responsibilities to the ministries. As appropriate, the Government will contract a consultant (from grant proceeds) to review and assess progress inimplementing the project and to assist in preparing the necessary documentation for the review. Specialists will review the community based contracting and participatory processes and assess the environmental and social impacts o f investments, both individually and cumulatively, and the adequacy o f safeguard procedures agreed for the project. The MTR will also review efforts to ensure good governance and reduce risk o fcorruption. 77. Whilst recognising that reductions in opium poppy cultivation will depend on a number o f different factors outside the scope o f this programme consideration will be given to looking at the impact the completion o f road works has on agricultural and income diversity in areas where opium poppy i s currently grown. ExternalEvaluations 78. At the end o f the third year and as input to the Project Implementation Completion and Results Report, an external evaluation will assess NEW'Simpact and provide program-wide recommendations. The evaluation will specifically assess whether the target set in Appendix 1: Results Framework and Monitoring achieved at the end o f the project, based on findings from the analytical works, the impact evaluation and monitoring records during the project. An independent external evaluation will also be carried out to evaluate the performance o f the ImplementationConsultant and the Capacity BuildingConsultant. Management Information System 79. A full-fledged MIS i s already established and i s functioning reasonably well at MRRD's PIU, while that o f MPW's PIU needs further improvement. Neither system i s used as a management tool at the present. During the life o f the project, a fully functioning M I S will be established at both PIUs (no later than June 30, 2008). It i s further envisaged that both systems shall integrate the National Rural Network Information, which will allow the PKJs to monitor implementation progress as part o f the national rural access program and to report on progress towards the targets set by the ANDs. 22 E. ECONOMICASPECTSAND JUSTIFICATION 1. ProjectBenefits 80. Since investments for NEWwill take place under OP 8.50, as such no formal economic appraisal i s required. Nonetheless preparations are being made to conduct an economic appraisal as part o f a mid-term evaluation. This is deemed sensible for a number o f reasons. First it will strengthen the evidence-base o f investment decision malung by exposing the benefits as well as cost consequences. Second the attempt to undertake economic appraisal during preparartion has exposed weaknesses in the basic data collection procedures o f both MRRD and MPW. These extend to traffic classification and counting; traffic forecasting; road maintenance costing; and knowledge o f vehicle operating, safety reduction and time costs. Steps to address these weaknesses are underway and will be further developed as part o f project capacity building measures in NERAP. Third it has become apparent that ministry staff has little knowledge o f economic appraisal concepts and procedures. These weaknesses too are being addressed as part o f ongoing and planned capacity building measures under NEW. Fourth the preparations for economic appraisal have revealed inconsistencies inthe procedures and standards used by the two ministries. These will be addressed as part o fproject coordinationarrangements so that there are a single national set o f procedures and standards. Finally, Government i s malung very substantial investments in rural access and a more formal and rigorous investment analysis would be beneficial. 81. The approach to economic appraisal (see details in Appendix 4: Economic Aspects) i s to seek to apply accepted international norms and procedures. Cost-effectiveness assessments will be re-examined so that they are applied only to roads with traffic levels below 50 vehicles per day (vpd) and not to all investments as at present. There also needs to be consistency between the cost-effectiveness criteria used by the two ministries. Currently MPW uses an influence area, and thus population, that is three times that usedby MRRDand well above international norms. This issue will also be examined as part o f project coordination arrangements. Formal economic analysis will be initiated on all roads suitable for appraisal using the simplified Road Economic Decision (RED) model, which i s recommended for roads with an average daily traffic (ADT) in the range o f 50-200 vpd. This is likely to cover most o f the road works proposed by MRRD and some o f those in the portfolio o f MPW. Appraisal can be done using default values, but efforts are underway to source Afghan parameters as far as this i s practicable inthe time available. 82. For roads carrying more than 200 vpd RED i s not normally recommended and HDM4 would be substituted. At present it i s not envisaged that the scale o f investment inroads carrying more than 200 vpd under NERAP justifies the expense o f calibrating H D M 4 for conditions in Afghanistan. As a default procedure use will be made o f the H D M 4 results from the MPW road master plan study, which yielded a simple graphical indication o fthresholds o f economic viability against AADT for different road improvement options.' L o w volume gravel, minor gravel and minor paved options gave internal rates o f retum o f over 15% above 125, 150 and 200 vpd respectively. 83. Field visits and close interaction with ministry staff have confirmed the inability o f the ministries to carry out economic evaluation o f proposed road improvements in time for appraisal. It is therefore proposed that systems and capacity will be put inplace inthe ministries so that an economic evaluation o f some roads can be carried out intime for the mid-term review. 'Ministry o f Public Works (2006): Master planfor road improvement project. FinalReport, April. 23 84. While detailed cost benefit calculations have not been carried out as part o f this emergency project preparation, international experience has shown that maintenance and rehabilitation o f rural roads and cross-drainage structures have a very high rate o f return. The component A for secondary rural access infrastructure will primarily focus on removal o f key access bottlenecks while component B for tertiary rural access infrastructure will primarily focus on rehabilitation o f critical links to address landlocked areas and bring connectivity .These will primarily be repair and restoration o f bridges, causeways, and culverts-all with minimum 10 year initial service life-and thus will provide high life-cycle returns despite the still existing risks o f low and irregular routine maintenance inthe future. It is expected that at least 1,750 kmo f secondary and tertiary roads and 8,800 runningmeters bridges and cross-drainage structures will be rehabilitated under this project. 85. Improved accessibility will help integrate the village economy with the regional and national markets. It will also lead to better allocation o f resources, technology transfer and realization o f higher productivity and outputs. It may also facilitate expansion o f rural non-farm activities. Diversification o f household income sources will minimize the household vulnerability risks and reduce the dependency on opium poppy cultivation as a livelihood strategy. 2. Sustainability 86. Two constraints on the sustainability o f project benefits are a shortage o f timely fundingfor road maintenance and a shortage o f staff capable o f managing the roadnetworks. Very little road maintenance has been done so far, despite an allocation that was made available to both ministries. Given the government's weak capacity to raise revenues and direct a reliable stream o f funding to maintenance, it appears more realistic to make external funding available for maintenance and to identify workable mechanisms to carry out routine rural roadmaintenance. 87. The proposed project includes funding for emergency maintenance by both ministries as well as fbnding for routine maintenance by MRRD. Emergency maintenance will be done by contractors usingefficient procurement arrangements. Routine maintenance o f tertiary roads will be contracted through the community development councils that were set up by the National Solidarity Program. This approach has several benefits for sustainability: (i) it uses local-level institutions that have already shown themselves able to manage public funds transparently; (ii) the rural roads already rehabilitated will be maintainedina cost-effective manner; and (iii) money will be injected into the rural economy, directly benefiting the rural population and poppy- growing areas, and raising the opportunity cost o f allocatinglabor to poppy cultivation. 88. Capacity building in Afghanistan has had only modest success and it would appear that international technical assistance has not always been used effectively. Unlike in the ongoing rural road projects, where UNOPS provides both capacity building and implementation assistance, the proposed project will employ consultants specifically qualified for capacity building (while the Implementation Consultant will provide on-the-job training). Such a differentiation o f on-the-job and formal training i s expected to lead to better defined capacity building efforts. There is an acute shortage o f practical training for university students and it i s proposed to continue providing internships for students. Further, no university training to a master's degree level in engineering i s currently available in Afghanistan and the proposed project includes a scholarship program. 89. A third aspect o f sustainability, which i s beyond the project's sphere o f influence, i s security. Based on experience in NEEPRA, the project will seek to involve communities to a large extent to ensure their ownership and to make use o f their much needed knowledge about 24 anti-government elements operating inthe project zones. Such information i s vital for project and contractor staff to gauge the risk level. E ENVIRONMENTALAND SOCIAL,SAFEGUARDS 90. Inpreparation o f the proposed project, the Government commissioned an assessment o f the implementation NEEPRA's Environmental and Social Management Framework (ESMF). This included an audit o f a representative sample o f road works to assess to what extent NEEPRA's ESMF was implemented, identify existing gaps and capacity constraints, and review appropriateness o f the institutional arrangements. The assessment concluded that: (i)the ESMF i s not sufficiently mainstreamed and project staff are not fully aware o f the existence and importance o f such a framework and (ii) the absence o f effective implementation arrangements for the ESMF regarding sub-project preparation and execution, reporting, monitoring and documentation mighthave caused delays inaddressing concerns and problems. 91. Based on this assessment the Government prepared an update o f the ESMF which should enhance the quality o f the road works, see Appendix 11: Environmental and Social Management Framework. The ESMF complies with the World Bank environmental and social safeguard policies as well as the Afghanistan's environmental laws and regulations, prepared by the National Environmental Protection Agency (NEPA). 1. Environmentaland Social Impact and Safeguards 92. Existing Social Safeguards Issues: while land acquisition has indeed taken place under NEEPRA, it is not possible to estimate the scale and impacts o f it. N o formal process o f land transfer or compensation has been adopted. On the basis o f community consultations, the assessment concluded that there has been voluntary transfer of assets even by vulnerable groups. It is assumed that for the majority o f the roads rehabilitated, the average land required for donation has been small and has not marginalized any o f the landowners. The lack o f documentation, however, has led to unavailability o f even tentative information on average land acquisition on the basis o f voluntary donation. Additionally, the assessment raises issues regarding weak community consultations - i.e. lack o f community involvement in planning o f road alignment and width, damage to community structures due to improper alignments - and hence no documentation o f community concerns and agreed mitigation measures. 93. Existing Environmental Safeguards issues: there are some problems with slope stabilization and erosion control, prevention o f land slides in sloping areas, cutting o f trees and lack o f tree plantation measures along the roads. Furthermore, there is a lack o f proper guidelines and concern for occupational health and safety o f workers, traffic safety during construction and operation. The new ESMFprovides mitigation measures for these issues. 94. The Project i s an Environmental Category B (partial assessment). The principles governing social and environmental management will be applied through the updated Environmental and Social Safeguards Framework prepared for the NEW (see Appendix 11: Environmental and Social Management Framework). The assessment carried out by the Government envisages that the World Bank OPBP 4.01 (Environmental Assessment), OP/BP 4.12 (Involuntary Resettlement), Natural Habitats OPBP 4.04 and the OPBP 4.11 (Physical Cultural Resources) could be triggered. The N E W ESMF has been updated to take into account these World Bank policies and their requirements. 25 95. The updated ESMF is applicable to all activities financed by NEW, and includes (i) key policy principles for social and environmental management, (ii) tools to guide the screening o f road works for significant social and environmental impacts, and to assist in the mitigation o f such impacts, (iii) procedures to ensure that these principles and tools are appropriately applied, and (iv) guidelines and an action plan for capacity building and monitoring. This updated Framework will be operationalized through the proposed Project's arrangements for implementation, capacity buildingand monitoring. 2. PotentialEnvironmental and Social Impacts 96. Environmental and Social Impacts. NEWi s expected to have mostly positive impacts on the general livelihood, socio-economic situation and market accessibility o f the beneficiaries, including on the local environment and health conditions. No adverse environmental impacts due to the location o f the rural roads are anticipated because the agreed upon list of roads respects the provisions o f the ESMF negative list: no archaeological, historical, or protected heritage monuments; natural habitats or nature reserves; or reserve, protected or unclassified forest areas are situated close to the selected roads. The potential negative impacts, ifnot properly mitigated, with respect to the biophysical environment, would mainly be effects on water resources, soil erosion, slope stability and aesthetic values of landscape, pollution o f aidriver courses and impact on flora and fauna. 97. Particular attention will have to be given to the mitigation measures to be implemented during the rehabilitationworks period inparticularregarding: temporary road diversion that may affect people's property and safety; soil erosion, clearing o f vegetation, slope instability, operation o f quarries and borrow pits; discharge o f sewage and other fluid waste from construction camps, and spillage o f pollutants (fuel, oil), as well as traffic safety and occupational health and safeguard ofworkers. 98. In general, impacts are expected to be those associated with the rehabilitation o f rural roads and reconstruction o f very small infrastructure (i.e. culverts, stream crossings, retaining structures etc.). Such impacts will be addressed by incorporating standard environmental operating procedures into the project implementation manual, contract documents, technical training courses, and monitoring systems. Appropriate Environmental Codes o f Practice (ECOPs) will be developed to address environmental issues at design, implementation and maintenance stages. Contractors will be responsible for applying these ECOPs as well as carrying out preliminary environmental screening. 99. Land Acquisition and Resettlement The activities to be undertaken under the proposed project involve rehabilitation o f existing secondary and tertiary roads and other related m a l access infrastructure that may involve only minor land acquisition and will not have any other adverse social impacts, but on the contrary i s expected to have significant positive social impacts regarding improved livelihoods. No activities that require involuntary land acquisition or the acquisition o f land requiring the resettlement or compensation of more than 200 people will be supported. Consequently, no Resettlement Action Plan i s required under the proposed project. The voluntary donation or compensated contribution of land for subproject activities will be guided by the "Guidelines for Land and Asset Acquisition, Entitlements and Compensation" includedinthe Framework. 100. The sub-project screening will ensure inclusion o f local minorities and that no groups are excluded from project benefits due to ethnic and religious affiliation. Employment opportunities within the projects will be available on an equal basis to all; based on professional competence, 26 irrespective ethnic or religious group affiliation. In all road improvements which require consultations with local communities or beneficiaries, gender-separated consultations will be conductedto elicit the views o fthe female population, along with that of the male population. 101. Mine Risk Management. Road works will not be undertaken without appropriate mine-risk management. A procedure for mine risk management was developed under the ongoing project and has been included into the updated ESMF for NEW. All risk assessment and clearance tasks shall be implemented in coordination with the United Nations Mine Action Center for Afghanistan (UNMACA) . 102. Cultural Property. Chance archeological finds will be recorded in project monitoring formats, the implementing agency will secure the artifact, and the Archeological Committee will be informed o f the find. Should the continuation o f work endanger an archeological site, project activities will be suspended until a solution i s found. Further information i s given in the Attachment 3 o f Appendix 11: Environmentaland Social Management Framework. 103. Disclosure of the Environmental and Social Management Framework (ESMF): The Government (MRRD and MPW) prepared an Executive Summary o f the updated ESMF in the local languages (Dari and Pashto) which has been disclosed to stakeholders in the relevant locations. The Englishversion o f the ESMF was disclosed, prior to appraisal, inthe World Bank Infoshop. Discussions are under way with Government to mainstream the ESMF for all NR4P funding. Experience fkom the ongoing program, which already has an acceptable ESMF, shows that it i s not the framework but the implementation that gives difficulties. Therefore each ministryhas appointed a focal officer who will be trained in safeguards and who will be tasked with a systematic follow-up o f these issues. In addition, a series o f workshops will be held for project staff. 3. SafeguardsManagementPerformanceandFollow-up 104. The NEW ESMF specifies Environmental Mitigation Measures (EMM), EnvironmentaVSocial Checklists for screening o f road works (Category B), along with Environmental Audit Forms. The Focal Officers should create and operationalize a reporting mechanism on the status o f the ESMF implementation and identify gaps and problems in this regard. They should also mainstream, with the help o f the project management team, the ESMF in the whole project cycle. This reporting system functionality will be an indicator o f whether the ESMF i s workmg or not. 105. The National Environmental Impact Assessment, promulgated by the National Environmental Protection Agency (NEPA) o f Afghanistan under its current regulations may require compliance with its regulationand incertain cases, NEPA certificationmightbe needed. 27 co N 1 n + t; 3s d 0 m 3 E L Y Y 2 8 2 8 2 3 2 I - ! E n q n r 3 0 3 BE B Y n g E I I I 3 0 m m Appendix 2: DetailedProjectDescription 1. The estimated total cost o f the project is US$137 million. The IDA grant allocation o f the proposed project i s US$112 million equivalent and GOA committed itself to finance the remaining US$25 million from its own resources or from the ARTF. The project would thus finance about 20-25 percent o f the total estimated cost o f the NRAF' in the next four years. The proposed project builds on the successful design and implementation o f the ongoing IDA projects, NEEPl and NEEPRA, which has been particularly strong on infrastructure delivery. Project implementation i s being carried out with the assistance o f a project implementation partner (IP). At this point there i s no feasible alternative to this approach but the proposed project will aim to decrease the dependence on the Implementation Consultant (IC) in line with permanent institutional arrangements for rural roads management, such as a rural roads department or agency. These arrangements have been clearly defined during project preparation and were finalized duringproject appraisal. The terms o f reference o f the I C include specific on the job training targets for the unit in charge o f the management o f the rural road network (see Appendix 5: ImplementationArrangements). Additionally the project will aim to involve local communities and social inclusion officers in the different stages o f sub-project design and implementation in order to leverage from their local knowledge, improve delivery, enhance security, and avoid delays i.a. due to land disputes. 2. The lending instrument proposed i s the Emergency Recovery Grant (OP 8.50) which currently applies to all World Bank initiatives in Afghanistan. The Islamic Republic o f Afghanistan requested on July 29, 2007 to use the retroactive financing facility provided under OP 8.50 which allows for one year retroactive financing and an amount o f upto 40 percent o f the intended financing amount. Government has proposed retroactive financing o f up to $21.3 million. It i s unlikely that the ministries will be able to disburse this much. Furthermore it i s preferably to remain under the contract ceilings o f the Implementation Partner and it i s therefore suggested to limit the retroactive financing to around US$18 million or 16 percent o f the proposed grant amount. 3. The detailed project components and activities included in each component are presented below: 4. ComponentA. Improvement of secondary roads (US78.2 million including contingencies and taxes of which IDA willfinance UW3.2 million equivalent). This component implemented by MPW includes four sub-components. Sub-component 1(US$67.4 million o f which IDA will finance US$42.4 million equivalent) i s for rehabilitation and reconstruction o f about 1,075 kilometers o f secondary rural roads. The proposed investment program, which was agreed upon at appraisal i s presented in Attachment 1 to this appendix. US$ 12 million have been earmarked by the Government for the highpriority Bamyan to Doshi road. This road will receive primarily treatment o f choke points and improvement of structures. The road selection was largely based on discussed and agreed criteria (see attachment 3 o f this appendix) These include increasing access isolated populated villages, many o f which may be highly poppy dependent, to the road network to facilitate delivery o f public and social services and access to markets.. But it has become clear that these criteria need to be further refined and selection needs to become more transparent. The multiple changes to the proposed investment program since the preparation mission in February 2007, clearly illustrate that prioritization i s not entirely based on fixed criteria. IDA funding complements the Government's ongoing rural road program and takes into account as much as possible global equity parameters to ensure balanced investment proposals between the secondary and tertiary roads and equity amongst regions, provinces and districts. 34 5. Sub-component 2 (US$2.8 million) addresses emergency repair works to roads and bridges following natural disasters such as heavy snow, rocks falls, landslides, heavy rains and flooding. Specific eligibility criteria that are simple and realistic have been defined at appraisal (covering e.g. proven exceptional event, re-opening o froads to link isolated areas, blockage o f heavy traffic road without possibility o f road deviations. These criteria will be included in the Financing Agreement to trigger this type of investment. 6. Sub-component 3 (US$0.2 million) will finance the environmental and social management plan, monitoring and evaluation; this includes provisions for monitoring the updated Environmental and Social Management Framework (ESMF) and activities that involve community participation. 7. Sub-component 4 (US$7.7 million) consists o f project implementation support to finance the services o f an implementationconsultant (IC) to implement the works, financial contribution to incremental operating expenses required to run MPW's program implementation unit (PIU) and support to implementthe non-works part o f component A. 8. Component B. (US$.52.1 million including contingencies and taxes of which IDA will contribute US$.52.1 million equivalent). This component will be implemented by MRRD and includes five sub-components. Sub-component 1 (US$3 1.5 million) i s for rehabilitation and reconstruction o f about 925 kilometers o f tertiary rural roads. The project will aim at providing basic rural access and promoting the development o f a professional labor-based contracting industry, a method which is particularly well suited for improvement o f tertiary roads. The average current investment level o f $29,000 per lulometer i s considered to be very high and an effort should be made during this project to adopt a basic access approach. The proposed investment program was agreed at appraisal and i s presented in attachment 2 o f this appendix. The road selection was largely based on discussed and agreed criteria which are shown in attachment 3 o f this appendix. These include increasing access isolated populated villages, many o f which may be highlypoppy dependent, to the road network to facilitate delivery o f public and social services and access to markets. As i s the case for MPW, the criteria needs to be refined and investment decisions need to be supported by decision making tools and become more transparent. IDA fundingcomplements The Government's ongoing rural road program and takes into account as much as possible global equity parameters to ensure balanced investment proposals between the secondary and tertiary roads and equity amongst regions, provinces and districts. 9. Sub-component 2 (US$2.8 million) will address emergency repair works to roads and bridges following natural disasters such as heavy snow, rocks falls, landslide and rocks blockage, heavy rains and flooding. Specific eligibility criteria that are simple and realistic have been defined at appraisal (covering e.g. proven exceptional event, re-opening o f roads to link isolated areas, blockage o f heavy traffic road without possibility o f road deviations). These criteria will be includedinthe FinancingAgreement to trigger this type o f investment. 10. Sub-component 3 (US$S.O million) will launch a routine maintenance program mainly on the already rehabilitated roads under the NRAP and will cover the initial estimated financing need for a period o f twelve to eighteen months. MRRD i s currently carrying out a maintenance pilot operation consisting o f eight roads covering 53 km. This includes routine, periodic and emergency maintenance and the results obtained so far appear to be promising. Communities were contracted to carry out routine and periodic maintenance works and contractors were hired for the emergency works. It was agreed during appraisal to implement this sub-component 35 through the National Solidarity Program (NSP) which leverages synergies o f these two priority programs. The Facilitating Partners (FP) o f the NSP will provide technical advice to the communities and using the Community Development Councils (CDC) as the entry point for community contracting for routine maintenanceworks. 11. Sub-component 4 (US$0.4 million) makes provisions for the environmental and social management plans, monitoring and evaluation; this includes provisions for monitoring the updated Environmental and Social Management Framework (ESMF) and activities that involve community participation. 12. Sub-component 5 (US$9.4 million) includes project implementation support: services o f an implementation consultant to implement the works and financial contribution to incremental operating expenses required to run the project implementation unit o f MRRD and implement the nonworks part o f component B. NERAP-Rehabilitationworks proposed-Summaryper ministry Islamic Republic ofAfghanistan NERAP Rehabilitationworks - Summary perMinistry CBase costs inUS$ million) Secondary Roads (Ministry of Public Works) 58.3 1,081 658 0.054 Tertiary roads (Ministry o f RuralRehabilitationand Development) 27.0 929 8,201 0.029 Total 85.3 2,010 8,859 0.042 * km:length o f roadto be rehabilitated ** Rm: runningmeters ofculverts, retaining walls and bridges to be rehabilitated 13. Component C. Institutional strengthening, project management and program development (US6.7 million equivalent including contingencies and taxes). This component will be implemented by MRRD in coordination with MPW and includes three sub-components. Sub- component 1 (US$O.G million) foresees setting up a rural roads management system including support for: (a) the formulation o f a rural access strategy and its implementation through a national prioritized investment program and proposed institutional and financial systems for the next five years to be presented to the donors by the project's mid-term rteview (MTR); this will include an assessment as to how NERAP may be able to maxmises the Counter Narotics Outcomes of its interventions; and (b) the setting up o f maintenance mechanism, maintenance programming for the short and medium term and support for its implementation, in complement to the routine and emergency maintenance works foreseen under component A and B. 36 14. Sub-component 2 (US$2.8 million) will finance capacity building activities for staff who will be tasked to manage the rural road sector, e.g. roadnetwork management (identification o f a core rural road network, definition o f appropriate service levels, data collection and analysis, training on most adapted cost benefit analysis models), public procurement, financial management, upgrading o f engineering shlls, reporting, community contracting and social inclusion tools, and geographic information systems. The project will continue to finance internships for at least 100 engineering with NRAP and 10 community developmenthocia1 inclusion students. It i s also planned to develop a program for managerial level staff who would receive on-the-job training in roads agencies in other countries. This sub-component will also include capacity building for contractors (national works contractors and engineering firms) which would target on-the-job training and business shlls (bidding, contract management and community contract management, works organization, and technical aspects). Four areas o f training needs exist within both ministries: (i) core capacities in technical and engineering; (ii) broad-based training in environmental and social safeguards; (iii) contractor training; and (iv) general skills in Computer and English literacy for staff o f the concerned ministries. For the capacity buildingeffort three avenues will be introduced: (i) Short-term and long-term training in the key areas o f technology, engineering and management to be offered through certificate, diploma, and master's degree programs. Students will be competitively selected for all types o f training. Given the lead time needed (especially for admission into longer-termdegree programs), a training calendar spanning the duration o f the program will be developed. (ii) Short, broad based training in specific subject matters will be facilitated by the National Shlls Development Program (NSDP). For example, training programs for contractors in the areas o f preparing bid- documents, procurement training, etc. can be facilitated by the NSDP which can help advertise, identify, and select appropriate local or international training providers, be involved incurriculum development and standards setting. (iii) Basic English and Computer Literacy for ministry staff will be achieved by implementing a voucher program for staff with pre-identified training institutions inKabul and inother major cities where such facilities exist inthe private market. In more, remote areas this may need to be offered in collaboration with institutions o f other ministries or through in-house programs. 15. Sub-component 3 (US$3.3 million) will cover project management support, financing the operating costs o f the National Coordination Unit (NCU), support to monitoring and evaluation, audits and fiduciary support services for MPW and MRRD,preparation o f the Mid Term Review and technical expertise to support the Steering Committee. 37 m W I 3 0 d : : E k E .-P 0 e E - .-e 0 dM - 2 hl - -c a - . - o T -c K K 2 e 2 E e Y .Y Lr. .- E .-Y a, E & .E e dM & 0 e Yv1 .C Attachment 3 Criteriafor sub-project selection - e Group 1.Former priorities 0 Criteria 1. Former priorities still not financed from the ProvincialPlanning Process (PPP) of June 2003. MRRDhad launched a bottom-up PPP nationwide in June 2003. Duringthis exercise the district representatives, in consultation with the communities, identified four priority projects per district based on the agreed criteria among the representatives. 0 Criteria 2. Former priorities still not financed from the NEEP provincial planning exercise of September 2004. In September 2004 NEEP organized a planning workshop in twelve provinces affected by drought to identify priority roads to be rehabilitated selected on agreed criteria among the district representatives usingthe pair-wise ranking method at the district level. e Group 2. Communities' requests 0 Criteria 3. Direct requests form the communities. Community Requests (CR) channeledthrough the planning departments o f MPW and MRRD. 0 Criteria 4. Community requests (CR) channeled though other administrative instances (e.g. local authorities, Governors, members o f Parliament) often with peace and reconciliationobjectives instrategic areas. e Group3. Consolidationworks to sustainpreviousruralroadinvestments 0 Criteria5. Consolidation works for roads that were rehabilitatedunder National Emergency Employment Project for Rural Access (NEEPRA) (drainage, upgrade works, surfacing o froadwith double-bituminous surface treatment, etc). 0 Criteria 6. Completion o f road works which were only partially funded under NEEPRA, for example an access road leading to a NEEPRA-fundedbridge. e Group 4. Connectivityfor isolatedareas 0 Criteria 7. Access of isolated populated villages many o f which may be highly poppy dependent to the road network to facilitate delivery o f public and social services and accessto markets. e Group 5. Complementaritieswith other social andruraldevelopmentprojects 0 Criteria 8. Complementarities with e.g. NSP, irrigation and agriculture investments 46 Appendix3: Summaryof ProjectCosts 7.4 26 10.0 26 8 881 488 l37.0 3 6 l l 2 47 Islamic Republic of Afghanistan Proposed National Emergency RuralAccess Project-NERAP Annex 3 Table B Components Project Cost Summary (US$ Million) Project Components % %Total Foreign Base Local Foreign Total Exchange Costs A. Improvement of secondary roads (MPW) 1.Secondayroadworks for some1050!an 36.6 23.2 59.8 39 49 2. Emergency maintenanceworks 1.3 1.3 2.6 49 2 3. Environmental and social plan, monitoring and evaluation 0.1 0.1 0.2 46 0 4. Implementationsupport (IC and PIU staff) 4.3 2.9 7.2 40 6 Subtotal Improvement of secondary roads (MPW) 42.3 27.5 69.8 39 57 B. Improvement of tertiary roads (MRRD) 1.Tertiary roadworks for some925 !un 21.1 6.8 27.8 24 23 2. Emergency maintenanceworks 1.3 1.3 2.6 49 2 3. Routinemaintenance works 4.9 2.1 7.0 30 6 4. Environmental and social management plan.monitoring and evaluation 0.2 0.2 0.3 46 0 5. Implementationsupport (IC and PIU staff) 5.5 3.3 8.8 37 7 Subtotal Improvement of tertiary roads (MRRD) 33.0 13.5 46.5 29 38 C. Jnstitutionnal strengthening, project management and program development 1.RuralRoadsmanagement system 0.2 0.3 0.5 57 0 2. Institutionalcapacity building 0.9 1.6 2.5 65 2 3. Project management support 1.3 1.8 3.2 58 3 Subtotal Institutionnal strengthening, project management and program develop 2.4 3.8 6.2 6 1 5 Total Baseline costs 77.8 44.8 122.6 37 100 PhysicalContingencies 2.9 1.5 4.4 35 4 Price Contingencies 7.4 2.6 10.0 26 8 Total Project costs 88.1 48.9 137.0 36 112 Note: Figures may not add up to total due to rounding 48 - - m o r N "- -0?oo w o c N - 0 - 9 m - - 9 0 - 0 0 0 - 0 0 0 o c = - O N ? - 0 0 0 - B * 0 E 3 i 0 10 Islamic Republic of AQhanistan Proposed National Emergency RuralAccess Project-NERAP Annex 3 Table E FinancialSummary (InUS$rnilIion equivalent) lhlPI,E:~V~KIL'~'~ZTION 2008 I 2009 1 2010 1PERIOD 2011 1Total ' Project Costs Investment Costs 21.6 32.7 51.7 25.1 137.0 100% Other Investment Costs GOMBudget Recurrent Costs Total Project Costs 21.61 32.71 57.71 25.11 137.0 Total Financing 21.61 32.71 57.71 25.11 137.0 Financing ProposedIDA contribution 21.6 31.1 44.5 14.8 112.0 82% GOA 1.6 13.I 10.3 25.0 18% To be Financed Total Project Financing 21.6 32.7 57.7 25.1 137.0 51 2 ' 0 ' 0 0 ' a Appendix 4: Economic Aspects NERAP - ProposedEconomicAppraisal approachand development 1. Purpose: Currently selection and prioritization o f road projects i s informed by community participation and cost-effectiveness criteria, but different approaches are adopted by the two main ministries - MPW and MRRD. Political influence is fairly dominant in project selection. There are also overlaps in the network responsibilities of the two ministries which further cloud selection certainties. 2. Investments for NERAP will take place under OP 8.50 conditions and so do not formally require an economic appraisal. Nonetheless all preparatory activities are being made to conduct an economic appraisal as part o f the project mid-term review. This i s deemed sensible for a number o f reasons. First it will strengthen the evidence-base o f investment decision malung by exposing the benefits as well as cost consequences. Second the preparations for economic appraisal have exposed weaknesses in the basic data collection procedures o f both MRRD and MPW. These extend to traffic classification and counting; traffic forecasting; road maintenance costing; and knowledge o f vehicle operating, safety reduction and time costs. Steps to address these weaknesses are underway and will be further addressed as part o f project capacity building measures in NERAP. Third it has become apparent that ministry staff has little knowledge o f economic appraisal concepts and procedures. These weaknesses too are being addressed as part o f ongoing and planned capacity building measures under NERAP. Fourth the preparations for economic appraisal have revealed inconsistencies inthe procedures and standards usedby the two ministries. These will be addressed as part o f project coordination arrangements so that there i s a single national set o fprocedures and standards. 3. Implementation: The approach to economic appraisal is to apply accepted international norms and procedures. Cost-effectiveness assessments will be re-examined so that they are applied only to roads with traffic levels below 50 vehicles per day (vpd) and not to all investments as at present. There also needs to be consistency between the cost-effectiveness criteria used by the two ministries. Currently MPW uses an influence area, and thus population, that i s three times that used by MRRD and well above international norms. This issue will also be addressed as part o f project coordination arrangements. Formal economic analysis will be initiated on all roads suitable for appraisal using the simplified Road Economic Decision (RED) model, which i s recommended for roads with an ADT in the range 50-200 vpd. This i s likely to cover most o f the projects proposed by MRRD and some o f those in the portfolio o f MPW. Appraisal can be done usingdefault values, but efforts are underway to source Afghan parameters as far as this i s practicable inthe time available. 4. For roads carryingmore than 200 vpd RED i s not normally recommended and H D M 4 would be used. InAfghanistan the present level o f investment for secondary roads carrying more than 200 vpd, however, does not justify calibrating HDM4 for local conditions. Roads which are considered as strategic by the military might receive considerable higher investment per km but no economic appraisal would be carried out for these roads. Therefore as a default procedure use will be made o fthe HDM4 results from the MPWroad master plan study, which yielded a simple graphical indication o f thresholds o f economic viability (IRR) against AADT for different road improvement options.' L o w volume gravel, minor gravel and minor paved options gave IRR's > 15% above 125, 150 and 200 vpdrespectively. 'Ministry ofPublic Works (2006): Masterplanfor road improvementproject. Final Report, April. 53 Appendix 5: ImplementationArrangements Institutionalset up andArrangements 1. The NEEP cluster o f projects and the Government's NRAP has been successfully implemented by the PDCU with the support of an implementation partner (IP). The PDCU coordinates the program on behalf the Ministry o f Public Works (MPW) and the Ministry of Rural Rehabilitation and Development (MRRD) with the help o f two project implementation units (PIUs). Even if the PDCU had a far reaching mandate o f joint budgeting, planning and programming, and reportingto Government and the donors, most of the implementationwork has actually been carried out by the PIUS.The two ministries have cooperated well on rural roads but the work programs have been carried out inparallel, as should be expected. 2. In the interest o f improving coordination between line ministries and to set the course for sustainable rural road management, it was agreed to dissolve the PDCU, which is not anymore justified and to retain the PIUs which in fact operate as program and not project units. At a latter stage, the MRRD PIU might be mainstreamed into the Rural Roads Department which was recently created inthe ministry. There i s also the possibility that a road agency might be created which could absorb both PIUs. The Figure below presents the proposed institutional set up, clearly distinguishing responsibilities for project oversight, coordination and monitoring; and implementation and management. 54 ImplementationArrangements A. Implementationperiod 3. Project implementation period. The project will be implemented over three years and four fiscal years from January 1,2008 to December 31,2010. B. Capacityof the Governmentto Executethe Project 4. Government has expressed a strong interest to take over the responsibility for program and project implementation from the Implementation Partner. Transition arrangements are needed to empower staff and improve their decision-malung capacity. Inthe interest of establishing the presence o f Government throughout the country, ministries consider it essential that they are given greater visibility and that the perception i s corrected that non-governmental organizations are the main actors o f change in Afghanistan. The World Bank, appreciating the interest o f the ministries, inparticular MRRD, to take full responsibility for project implementation, has aimed to propose an arrangement that corresponds to the expectations o f the ministries while ensuring that the fiduciary requirements o f the World Bank can be met. During project preparation, agreements have been reached with the Government on the implementation arrangements for the project and it was agreed that the services o f an Implementation Consultant (IC) will be required to ensure the smooth andrapid implementation o f the project. These are described below: C. Programandprojectimplementationandmanagementstructure Programand projectimplementationandmanagementstructure 5. Project oversight. An inter-ministerial Steering Committee (SC), chaired by the Minister o f Finance (or his representatives) and comprising ministers (or their delegates) o f Public Works, Rural Rehabilitation and Development and sectoral ministries involved as the main beneficiary ministries in the project (including agriculture, basic education, health, counter narcotics), is responsible for the overall policy, strategic planning and project oversight and for integrationwith other rural development programs. Government has decided to invite donors to be permanent observers on the SC Other observers such as local authorities, and experts could be invited to attend the SC as required. The SC will meet regularly, at least twice a year and on an ad hoc basis when required. To facilitate the work o f the SC, a National CoordinationUnit (NCU) will be put inplace at the MinistryofFinance that would be responsible for secretariat support to the SC and for reporting to the government and the donors involved inthe sector. 6. Project coordination and monitoring. Given the emergency nature o f the project, the strategic importance o f the project, which i s an initial step to a larger program, the large number o f activities, to be completed within a short time frame, and the still limited capacity o f the government on coordination and monitoring aspects, the following institutional arrangements have been agreed to ensure that funds disburse quickly, multi-sector objectives are reached, and transparency i s maintained. 7. A small and efficient national coordination unit (NCU) will be set up by ministerial decree within the Ministry o f Finance (to be established no later than January 1, 2008) and will be responsible for overall coordination o f the entire NEW project and program. The N C U will in particular ensure donor coordination which will be a key element o f a sustainable and smooth multi-year programmatic approach. It will be headed by a full-time project administrator (a 56 senior project management specialist to be recruited on a competitive basis according to World Bank guidelines) who will be responsible for day-to-day coordination o f the project. The NCU works in coordination with the Program Implementation Unit (PIU) o f MPW and MRRD and other relevant ministries and agencies involved in rural development. Its main function i s to monitor and evaluate the overall project implementation and to report the consolidated progress to the SC. It i s also responsible for (a) assuring steady progress o f execution in accordance to an implementation schedule reviewed and approved by the World Bank, (b) regular reporting to the SC, (c) monitoring implemented activities included in the contracts of the international implementation consultant (IC) and capacity building consultant (CBC) to ensure adequate and smooth transfer o f slulls to the national staff, and (d) ensuring that a high ethical standard and transparency i s maintained throughout the process. 8. To ensure better coordination, a Technical Worhng Group chaired by the N C U and composed o f the focal points o f beneficiary ministries and implementing bodies (IC and PIUs o f MPW and o f MRRD)will be establishedprior to project effectiveness. This working group will meet on a regular basis and at least monthly in order to ensure adequate technical coordination and communication between ministries and implementing entities at the implementationlevel. 9. Project management and implementation. At this stage and based on the assessment of ministries capacities, it i s now proposed that: (i) will implement component A. For the MPW works part, it will delegate most o f its implementation responsibilities to an IC, (to be selected and recruited prior to project effectiveness) which will be in charge o f and responsible for the implementation o f the investments under the overall responsibility o f MPW. Part o f Non works activities under Componenet C will be implemented by MPW with the support o f the required expertise (to be recruited under PPF financing, if these recruitments fail the responsibility for non-works will be assigned to the IC); (ii) MRRDwill implement activities under component B and part of Component C. For the works part, it will delegate part o f its technical and fiduciary responsibilities to an I C (to be selected and recruitedprior to project effectiveness) which will be in charge of and responsible for the implementation of the investments under the overall responsibilityo f MRRD.Non works activities will be managed by PIUMRRD and implemented by the functional departments o f MRRD with the support o f the required expertise (to be recruited under PPF financing) and training o f the newly recruited staff. The two tables below summarize the distribution o f responsibilities between the I C and the ministries for the works implementation o f components A and B. Table 1:Distributionof responsibilitiesinMPW imdementationmechanism Works implementationmechanismcomponentA Responsibilities MPWPIU I C day-to-day management o fN E W X coordinate and supervise the implementation o f the infrastructure works (XI X sub-projects identification, prioritizationand selection X (XI Reviewing and/or preparing designs, cost-estimates and Bills o f Quantities (XI X Review andor reparation o f tender documents (XI X Approval o f tender documents (XI X Issuing o f tender documents X X Evaluation ofbids (XI X Recommendation for awards (XI X Pre-award review (XI X Award (XI X Signature o f contract X 57 Implementation and supervision o f sub-projects, including quality and quantity (XI X control and contract administration Preparation o fpayment (XI X Payment to contractors (co-signatures) X X Certification o f Completiono f Work (XI X Overall management o f the ongoing works. (X) X Technical and financial monitoring o fthe contracts inconformance with the project (X) X performance indicators Monitoring o f the environmental and social aspectsby the sub-contractor (X) X I C Staff Management and counterparts coordination (X) X Counterparts andPIU staff involved with IC management X (XI Operations (X) X Contract and Project Financial Management (XI X Reporting to the Bank X (X) lote: X PrimaryResponsibility (X)SecondaryResponsibility 58 Table 2: Distributionof responsibilitiesinMRRDimplementationarrangement Works implementationmechanismcomponentB Responsibilities MRRDlPIU IC day-to-day management ofN E W coordinate and supervise the implementation of the infiastructure works sub-projects identification, prioritization and selection Reviewing and/or preparingdesigns, cost-estimates andBills o f Quantities Review andor preparation o f tender documents Approval o f tender documents Issuing o f tender documents Evaluationofbids Recommendation for awards Pre-award review Award Signature of contract Implementation and supervision o f sub-projects, including quality and quantity control and contract administration Preparation o f payment Payment to contractors (co-signatures) Certification o f Completion of Works Overall management o f the ongoing works. Technical and financial monitoring o f the contracts inconformance with the project performance indicators Monitoring o f the enviromental and social aspects by the sub-contractor (including X (XI recruitment and employment procedures) I C Staff Management and counterparts coordination Counterparts andPIU staff involved with I C management Operations Contract and Project Financial Management Reporting to the Bank X Ite: X PrimaryResponsibility (X) Secondary Responsibility The scope o f services of the IC is determined by the above-mentioned implementation mechanisms for works and includes: 0 D1:For MPW,the Consultant will be responsible for the execution (and training on the job o f counterparts designated by MPW) o f all tasks necessary for the implementation o f works foreseen under component A as per Table D1below, from the engineering studies to the certification of completion o f the works. The Consultant will also assist and support MPW (Optional) in setting up and managing efficient and sustainable procurement and financial management systems for the non works project activities which will be implemented by MPW. 0 D2:For MRRD,the Consultant will beresponsible for the execution (and training onthe job o f counterparts designated by MRRD) o f all tasks necessary for the implementation o f rehabilitation works foreseen under component B as per Table D2 below, fiom the engineering studies to the certification o f completion o f the works. The Consultant will 59 also assist and support MRRD (Optional) in setting up and managing efficient and sustainable procurement and financial management systems for the non works project activities which will be implementedby MRRD. 1. Two lots for the Consultancy Services are envisaged which could eventually lead to two separate contracts for MPW and MRRD. D.3 Proceduresmanuals 1. Within three months after the signature o f the contract, the Consultant will submit to MPW and to MRRDand for IDA'Sapproval: (a) a manual o f administrative, accounting, and financial procedures (including the procurement sub-manual and Financial management sub- manual with the specification o f the accounting software which i s proposed and should meet the World Bank requirements), consistent with the legal documents included in IDA'S Financing Agreement, andthe Bank's procurement, disbursement, and financial management guidelines; (b) a project implementation plan and manual which include the details o f activities, timelines and procedures to be followed inexecuting the project. The procurement plans proposed for the project will also be reviewed by the consultant who should commit himselfto the updated key target dates that he proposes and updatedregularly. 2. The UNOPS LIPW Project ImplementationManual (PIM) may be usedas a basis for the development o f the NEWProject ImplementationManual. D4. Procurement,contract managementandwork supervision 3. The following specific activities will be carried out by the IC for each sub-project in full compliance with the procurement and project management procedures agreed upon duringthe project preparation, with procedures defined in the Grant Agreement and with IDA guidelines. Inthe main, the activities have been defined inTable D1et D2 and include inter alia: Survey o fthe works Preparing designs, cost-estimates and Bills o f Quantities Preparation and approval o f tender documents on the basis o f sample bidingdocuments agreed upon duringthe project evaluation Publicationo f Specific Procurement Notice inthe newspaper and website Issuingo ftender documents Evaluationo fbids Recommendation for awards Award o f contract Implementationand supervision o f sub-projects, including quality and quantity control and contract administration Payment to contractors Technical and financial monitoring o f the contracts inconformance with the project perfonnance indicators Monitoring o f the social targeting by the contractorhb-contractor (including recruitment and employment procedures) Certification o f Completion o f Work Overall management o f the ongoing works. 60 4. The IC shall also identify goods and equipment necessary for the execution o f the project within its own contract (to be also procured according to the World Bank guidelines and procedures) at the Start o f the Consultancy. For Works supervision, the tasks involved shall include butnot limitedto: Issuingthe order to commence the works; Approving Contractor's work program, method statements, material sources, etc; Preparing and /or approving working drawings, approving the setting out o f the works, and instructingthe contractors; Comprehensive supervision o f project implementation activities carried out by the contractor to ensure complete compliance with the drawings, technical specifications and various stipulations contained inthe Contract Document; Approving the Contractor's detailed work program, the plant and machinery deployment schedule, contractor's superintendence, personnel etc; Approving the Construction Methods proposed by the Contractor for carrying out the works to ensure that these are in conformity with the sub project's technical requirements, implementation schedule , environmental and social management flamework (ESMF), as well as safety o f works, personnel and the general public; Takmg measurement and keep measurement records; Maintaining records, correspondence and diaries; Preparing and issuingreports as defined subsequently; Certifying work volume and recommending interim certificates for progress payments; Processingthe contractor's claims; Maintaining consolidatedproject accounts, and preparingfinancial statements; Certifying completion o fpart or all o f the works; Ensuringtimely completion of all works; Identification o f specific events that may impact negatively on the works (quality, contract price, delays, etc.), evaluation o f these impacts and propose any course o f action to mitigate these impacts; Associating himself with the tests being carried out by staff o f the Contractor and, undertalung additionaltests as necessary to ensure the quality o f works; Reviewing the test resultskertificates o f all construction material and or sources o f material and undertalung additional tests as necessary to assess the quality o f works; Preparing updated and additional drawings as required during the contract period and theirtimely issueto the contractor; Carrying out detailed chechng and verification o f the setting out data for the work includinglines, levels and layout to ensure conformity with the workmg drawings; Ensuringtakmg requisite samples duringexecution and promptly advising the contractor about the result; Carrying out regular inspection o f the Contractor's Plant, Machinery, installation, etc and ensuring they are adequate and are in accordance with the terms and conditions o f the contract; Evolving and implementing a system for the quality assurance o f the works. The system o f control o f quality o f material and completed works shall also include sampling method and criterion and acceptance criteria; Ensuring that road safety issues identified at the design stage are properly addressed duringconstruction, and conducting aroad safety audit at every stage; Preparation o f complete records and reports on tests performed by him and chechng the Contractor's as built drawings for the works; 61 Provide the employer with complete records and reports for defending Contractor's Claims before Adjudicator/Arbitrator D5. Other responsibilities 5. The Consultant i s also requested to perform regularly (at least on a quaterly basis) the consolidation o f works and non works for MPW and MRRD and to present the project for reporting purposes. The Consultant will also be requested to take the responsibilities for the regular production o f the FMR (Financial Monitoring Reports) as per World Bank requirements and guidelines. D6. Reporting: 6. The Consultant will submit in five (5) printed copies and in electronic format the following reports to MPW, according to formats to be agreed upon one month after the signature o f the contract: Monthly progress reports, giving an overview o f the physical and financial progress o f all schemes; Quarterly progress reports, giving an overview of the total project budget and expenditure, the overall progress compared to the agreed indicators, milestones achieved during the quarter, the main problems and constraints and a concise work plan for the next quarter; Annual Work Plans, whereby the first annual work plan contains an overall work plan for the full project; FinancialMonitoring Report (FMR)or InterimUnaudited FinancialReports (KJFRs) Updating o f Procurement Plan; Completion Report, at the end o f the project; Ad hoc reports, as from time to time requested by the MPW andor MRRD. The contractor i s expected to maintain a database with all ongoing road works, in order to facilitate these reports. SubprojectWorks ProgressMonitoringand Subproject CompletionReport The Consultant will prepare the following reports: o Monthly ProgressReport with tables standardizedto be submitted by the tenth day o f the following month, o Ad hoc and special reports to be submitted within reasonable delays on working incidents, technical issues, etc. arising duringprogress o f works; o Quarterly report shall be submitted by the 15' day of the following quarter. Two copies o f this report shall be sent to IDA. Thisreport shall include: i. Physicalandfinancialprogressachievedandtheprojectedprogress for the forthcoming period, ii.Problemsencounteredandcorrectivemeasurestakenorrecommended. iii.Staffassignedbythe Consultant, type ofinputsanddurationandthe proposed input o f key personnel for the next quarter, iv. The Contractor's personnel and Plant and Machinery used, a list o f Equipment and materials not in use during the previous period and their comparison with original planning; 62 v. Records o f the meetings regardingcontract administration and decisions taken, Mobilization o f resources (Consultant's and Contractor's) for the forthcoming period, vi. Approval/ changes in Works program if any, delays anticipated, and action proposed. o Works Completion Report after the provisional acceptance o f works. This shall include the observations and recommendations o f the supervision team, the actual works carried out, detailed costs o f the works and actual quantities compared to planned works, approved variations, and recommendations on any unsettled Contractor's Claims. The report shall also include a detailed break down on the Contractor's final Contract sum (cost o f wages, cost materials used, cost o fplant and machinery, depreciation costs, taxes, etc.). o The Provisional Final Report to be submitted not later than one (1) month after the provisional acceptance o f work. The ClientRmployer will provide comments and observations within a period o f one month after receipt o f the report and the Consultant shall finalize the report within one month after receipt o f any comments. The final report shall be submitted in ten (10) copies. o The Subproject Completion Report shall be submitted after final handing over o f the works. 7. The MPW and MRRDwill provide the following inputs: 0 Free access to all land for which access i s required for the performance o f the services; 0 Office space for national HQand regional offices, and equipment newly procured under the NEEPRA project; 0 Counterpart personnel: MPW and MRRD will supply counterpart staff. These counterpart staff will take part in all activities mentioned above. The Consultant i s expectedto give on-the-job training to these counterpart staff. Access to all data and documents requestedby the contractor, unless these documents are confidentialinnature. D7: IC ContractReview 8. The Client will arrange for an independent review o f contract compliance on an annual basis or as needed 63 Appendix 6: ProcurementArrangements 1. Country Context 1. The Bank has gained substantial experience and understanding o f the procurement environment inAfghanistan through its involvement in the interimprocurement arrangements put inplacethroughEmergency Public Administration Project (EPAP) as well as withthe institutions such as Afghanistan Reconstruction and Development Services (ARDS) that i s holding the current responsibilityfor government's procurement administration. As part o f the broader review o f Afghanistan's Public Finance Management (PFM) system, the Bank recently carried out an assessmento f the procurement environment inthe country based on the baseline and performance indicators developed by a group o f institutions led by the World Bank and Organization for Economic Co-operation and Development (0ECD)Development Assistance Committee (DAC). 2. The first key issue identified through the procurement assessment was the needfor ownership and a champion in the Government for reform, deepening o f capacity, ensuring integrity in the operation o f procurement systems, and promoting sound procurement among ministries. 3. A new Procurement Law has been adopted inNovember 2005 which radically transforms the legal and regulatory framework for the procurement administration o f Afghanistan. While it provides a very modem legal system for procurement, effective implementation o f the law may encounter difficulties in the current weak institutional structure and capacity o f the Government. A Procurement Policy Unit (PPU) has now been established under MoF to ensure the implementation through the creation o f secondary legislation, standard bidding documents, provision o f advice and creation o f the necessary information systems for advertising and data collection. "Rules o f Procedure for Public Procurement" which details the better implementation o fthe Procurement Law has been issuedby M o F as circular number PPU/COO5/1386 dated April, 12 2007. The Procurement Appeal and Review mechanism i s in place and the Manual o f Procedures for "Procurement Appeal and Review" has been issued by M o F as circular number PPU/NOO1/1385 on March 18,2007. 4. In the absence o f adequate capacity to manage procurement activities effectively, some interim arrangements have been put in place to improve the procurement management o f the country. A central procurement facilitation service, ARDS has been established under the supervision o f Ministry o f Economy. The Bank and the Government has agreed on a program for country wide procurement reform and capacity building, leading to the transition from centralized to decentralized procurement services. The Bank funded Public Administration Capacity Buildingproject (PACBP) is the primary instrument for implementingthe program to strengthen capacity o f the line ministries to manage public procurement in an effective, transparent and accountable manner. However, the implementation o f the procurement capacity building strategy has not made any significant progress yet due to lack o f coordination and delays in decision making within the Government. The envisaged radical changes to the procurement management environment expected from the new Law also require the urgent implementation o f a comprehensive human resources and capacity development program. The implementation o f the procurement reform component o f the PACBP should be considered with due priority to ensure that fiduciary standards are further enhanced and that capacity i s developed inthe Government to maintain these standards. 64 5. A Consultant has been mobilized under the PPU/MoF to canyout the capacity Building which focuses on systematic training o f staff o fministries inpublic procurement. The assignment includes conduct of trainingprograms to private sector. The consultant has completed the training needs assessment and the program for training o ftrainers has begun. PartA. General 6. The proposed project will be implementedby MPW and MRRD.MPW will be responsible for the implementation o f improvements to secondary roads (US$78.2 million o f which IDA will finance US$53.2 million equivalent) and MRRD will be responsible for the improvements to tertiary roads (US$52.1 million) both components focusing to improve the rural access. The institutional component is US$6.8 million. 7. The Procurement administration o f the project would be carried out in accordance with the World Bank's "Guidelines: Procurement under IBRD Loans and IDA Credits" dated May 2004, revised October 2006, "Guidelines: Selection and Employment o f Consultants by World Bank Borrowers" dated May 2004, revised October 2006 and the provisions stipulated inthe Financing Agreement. The World Bank's "Guideliens on Preventing and Combating Corruption inProjects Financed by IBRD Loans and IDA Credits and Grants dated October 15, 2006 has been shared with the recipient. The general description o f various procurements under different expenditure categories are described below. For each contract to be financed by the Grant the different procurement methods or consultant selection methods, the need for prequalification, estimated costs, prior review requirements, and time frame are agreed between the Grant Recipient and the Bank project team are described inthe Procurement Plan agreed with the Government at appraisal and finalized during negotiations. This Procurement Plan will be updated at least annually or at lesser time intervals as required to reflect the actual project implementation needs and improvements inthe institutionalcapacity. ProcurementofWorks 8. Component A Improvement of secondary roads (US$78.2 million o f which IDA will finance US$53.2 million equivalent): This component will be implemented by MPW and will include four sub components. Sub component 1 Improvement to secondary roads (US$67.4 - million o f which IDA will finance US$53.2 million equivalent): Around 45 roads, or 1075 lan, have been identified to be improved, by gravelling, Double Bituminous Surface Treatment (DBST), Hot mixed Asphalt overlay and several bridges. There will be around 85 to 90 contracts. Contracts for several roads may be sliced and packaged to attract both small and medium scale contractors. The majority o f the contracts (roadshridges) are estimated to cost less than US$ 1.0m. The remaining contracts would be up to US$ 5.6 million. All contracts will follow N C B procedures. The recipient shall use the SBD (small works) revised M a y 2007 customized to Afghanistan. All the contracts will be reflected in the procurement plan. MPW has already invited bids for six contracts and four bids are under evaluation and more bidding documents are under preparation to procure works contracts under this component. During the retroactive financing period, IDA will review all the bidding documents/contract award recommendations in order to: (i) buildthe capacity o f the staff; and (ii) compliance to be ensure eligible for retroactive financing. 9. The other three sub components are to: (i)facilitate emergency repair work (US$ 2.8 million); as these are emergency activities there will be not be an agreed procurement plan. However IDA'Sno objection will be requested to canyout such works which are mainly caused by flood damages and similar natural calamities. As the estimatedvalue ofthese contracts will be 65 less than US$ 100,000, such contracts will be procured following shopping procedures. In the event that the estimated cost is more than US$ 100,000 the qualified contractors may be selected from the data base and allowed to submit bidswithin a short period o f time. (ii) Preparationo f the social and environmental management plan (US$ 0.3 million); and (iii) Project Implementation support consultancy split between component A and B. 10. Component B Improvement of tertiary roads (US$52.1 million equivalent): This component will be implemented by MRRDand includes five sub components. Sub component 1- Improvements o f tertiary roads (US$31.5 m). There will be around 86 identified roads under this component to improve about 925 km o f rural roads. There could be around 100 contracts, i.e. road works may be sliced and packaged to attract both small and medium contractors. Fifteen to 20 contracts will be implemented by communities under community contracting procedures and will have minor engineering requirements. All contracts, except community projects, will be procured following N C B procedures. The recipient shall use the SBD (small works) revised May 2007 customized to Afghanistan. All the contracts will be reflected in the procurement plan. Community Participation shall be carried out in accordance with paragraph 3.17 o f the procurement guidelines and the procedures set out inthe Project Implementation Manual. MRRD has already invitedbids for 9 contracts, bids for 6 contracts are under evaluation and 3 more are under tender. During the retroactive financing period, IDA will review all the bidding documents/contract awardrecommendations in order to: (i) the capacity o f the staff; and (ii) build ensure compliance to be eligible for retroactive financing. 11. The other four sub components are to: (i) facilitate emergency repair work (US$2.8 million); as these are emergency activities there will not be an agreed procurement plan. However IDA'S no objectionwill be requested to carryout such works which are mainly caused by flood damages and similar natural calamities. As the estimated value o f these contracts will be less than US$ 100,000, such contracts will be procured following shopping procedures. In the event that the estimated cost i s more than US$ 100,000 the qualified contractors may be selected from the data base and allowed to submit bids within a short period o f time. The recipient shall use the SBD (small works) revised May 2007 customized to Afghanistan; (ii) routine maintenance program (US$8 million) based on experiences fi-om a 58-km pilot project that shows promising results; this sub-component will be implemented by contracting through the Community Development Councils which have been set up by the NSP; a procurement plan will be prepared and agreed upon; (ii)preparation o f the social and environmental management plan (US$ 0.3 million); and (iii) Implementationsupportconsultancy. Project Procurementof Goods: 12. Project will finance vehicles, computers, printers, scanners communication equipment, internet connectivity equipment, office equipment such as photocopy machines, fax machines, digital cameras, civil engineering equipment, engineering quality control equipment, software including software for project management and engineering design Depending on the nature o f the goods, procurement methods such as ICB, NCB, Shopping and Direct Contractingprocedures will be used. All contract estimated to cost US$ 200,000 shall follow ICB procedures. The contracts estimated to less than US$ 200,000 and more than US$ 100,000.All contracts for goods estimated to cost less than US$ 100,000 will be procured following shopping procedures in accordance with paragraph 3.5 o f Bank's Procurement Guidelines. Off the shelf computer software and other goods meeting the requirements o f paragraph 3. 6 o f Bank's Procurement Guidelines shall be procured following Direct Contracting procedures with prior agreement with IDAindependent o fthe value. 66 Selectionof Consultants: 13. The major TA contract to be financed under the grant i s the Project Implementation Consultant's assignment to support both MRRD and MPW. Several Assignments have been procured under the PPF. Short lists o f consultants (firms) for services estimated to cost less than US$lOO,OOO equivalent per contract may be composed entirely o f national consultants in accordance with the provisions o f paragraph 2.7 o f the Consultant Guidelines. For services exceeding US$200,000 or more QBS/QCBS shall be used as appropriately and for services estimated to cost less than US$200,000, QCBS, CQS, Least Cost Selection, Fixed Budget Selection may be used. Individual selection of consultants shall be in accordance with Section V o f Bank's Guidelines for Selection o f Consultants. Single Source Selection o f Consultants for firms and individuals would be allowed with prior agreement with IDA. StaffDeveloDment: 14. The Grant will finance several study tours and in country workshops. Furthermore the grant will include training activities and a scholarshipprogramfor engineering. IncrementalOperationalCosts 15. Incremental operational costs would be financed by the project would be procured using the implementing agency's administrative procedures consistent with the Afghanistan Procurement Law which were reviewedand found acceptable to the Bank. PartB.Assessment ofthe agency'scapacityto implementprocurement. 16. The staff o f the proposed PIUs o f MRRDMPW has limited experience in handling IDA financed projects and the experience tends to be limited to procurement o f civil works. These will constitute the main procurement activities under the proposed project. Currently both ministries are implementing several donor financed projects with the assistance o f UNOPS as the ImplementationPartner (IP). 17. A procurement capacity assessment o f both the ministries was carried out by Deepal Fernando (Senior Procurement Specialist) and the findings are separately summarized below. 18. Issues on procurementhmplementationunder the ongoing projects: The procurement actions under the ongoing projects (NEEP, NEEPRA, and the JSDF-funded Rural Alternative Livelihoods grant, RAL) are carried out by UNOPS as the IP on behalf o f MPW and MRRD. Initially IDA agreed to allow UNOPS to use its own procedures to carry out procurement. Following en ex-post audit, however, it was decided the UNOPS should follow IDA procedures including the SBDs. Despite the input o f the IP, delays were encountered in the preparation o f biddingdocuments and inbidevaluations (60-120 days from the date o fbidopening). Staff from the IP was involved in all stages o f project implemeqtation. It was noted that majority o f the contracts hadprice modifications mainly due to quantity variations and it was establishedthat this was due to inadequate surveys and designs. Several bids were cancelled due to unrealistic bid estimates. Most o f the contracts had to be extended beyond the initial intended completion period because completion periods had been unrealistically short. IDA agreed to relax several post qualification criteria to promote wider participation by the local contractors in view o f the post conflict nature o fthe country. 67 19. For the proposed project MRRD and MPW have agreed to: (i) minimize variations by carrying out proper surveys and designs. This will also prevent re-invitation o f bids due to unrealistic estimates as seen under the on going project; (ii) allow more realistic time periods for completion o f the works contracts with due consideration to contractor capacities, workmg season, security, and other constraints; (iii)complete bid evaluations within 30 days of bid opening; and (iv) reduce the number o f members o f the seven-member technical review committee constituted for review and approval system for bid evaluation report and contract award recommendations. It would be useful to develop a system to faciliate price adjustment which will have economic benefit to the client. 20. Procurement under the proposed Project: (a) MPW: The PIU will delegate most o f the implementationresponsibility including technical/financial tasks, to the IC. The IC will manage a float account to ensure timely payments. The surveys and designs and procurement actions will be carried out at the central level by the respective divisions (survey, design o f roads, design o f bridges, contracts) and the nine, already established, regional offices will be responsible to carryout construction supervision. The IC will provide oversight to the respective divisions o f MPW to assure quality. The IC will have a competent procurement specialist to assist in all procurement actions. The contract division is responsible for preparation o f bidding documents, issuing the same and technical evaluations. A committee comprising o f three members will be responsible to review the technical evaluation reports prepared by contracts unit and approve contract award recommendations. Currently the contract unit i s equipped with one international staff, contracts officer (recently attended a training program "Procurement under Bank Financed Project, India) and a contracts assistant. There are three vacancies inthe unit for; (i)procurement assistant; (ii)contracts engineer (associate); and (iii) contracts member (clerk). These positions will be filled inthe near fbture. Considering that the project is scheduled to be completed within four years fkom January 1,2008, it was agreed that all contracts will be awarded by December 12, 2008. Several contracts under the project have around 24 months o f intended completion periods. 21. MRRD: The PIU will delegate most of the implementation responsibility including technical/financial tasks to the IC. The I C will manage the special account to ensure timely payments. The surveys will be carried out by staff at the regional offices. Currently they are being assisted by the IP and the IC will continue provide technical expertise including quality control aspects o f surveys and design. The designs will be carried out by the design unit and are reviewed by a screeningteam consisting o fthree members. Following approval o fthe technical designs and the BOQ the documents are passed on to the contract unit.The contract unit i s headedby a Senior Contract Engineer (recently attended a training program "Procurement under Bank Financed Project, India), two contract engineers and one contract admin assistant and a contractor registration officer. This unit maintains a contractor registration system for contractors inthe road and building sector which has been developed by MRRD. This i s now being used by MPWAJNOPS and other agencies. Inaddition a data base has been created by MRRDto carryout computerized unitrate analysis work items. The unitrates for different work items can be updated dynamically based on the current market rates of labodmachineryand, materials. 22. MRRD has a Procurement division headed by a Director. This unit i s carrying out procurement, logistics and contracts for MRRD. 23. However in order to strengthen the capacity the following seminars are planned or have already been conducted. It is also planned to translate the Guidelines: Procurement under IBRD Loans and IDA Credits and Guidelines: Selection and Employment o f Consultants by World Bank Borrowers inDari. 68 Expected outcome / 1Estimated 1 Estimated I Comments Activity Description Duration Start Date 1 Procurement Workshop: % day One program already Introductionto NCB completedon 2/27/2007 BiddingDocument for civil works 2 Procurement Workshop: Bid 5 days September Completed but mightbe Evaluation 2007 repeated 3 Procurement Workshop: 2 Days March Completedbut mightbe Procurement o f Goods 2007 repeated 4 Selection o f Consultants 1day October 2007 5 Procurement o f civil works 5 days September Already conducted under Bank financed 2007 projectslcontract administration 24. The procurement riskat the level could be considered as "Average". Inorder to mitigate such highrisks fiduciary safeguards including those related to procurement and social audit will be built into the system and explained inthe Project ImplementationManual (including sections on procurement and financial management). PartC.ProcurementPlan 25. The Grant Recipient, at appraisal, has developed a Procurement Plan for project implementation which provides the basis for the procurement methods. This plan has been agreed between the Grant Recipient and the Project Team on November 8, 2007 and i s available. It will also be available in the Project's database and on the Bank's external website. The Procurement Plan will be updated in agreement with the Project Team annually or as required to reflect the actual project implementation needs and improvements ininstitutional capacity. PartD.Frequencyof ProcurementSupervision 26. In addition to the prior review supervision to be carried out from Bank offices, the capacity assessment o f the Implementing Agency has recommended one procurement review per year in the field to carry out post review o f procurement actions and the compliance with the agreed procedures at community level. As the overall project risk for procurement i s high, therefore, the percentage o f contracts to be post reviewed will be 20%. PartE.Social Audit 27. Institutional arrangements for social audit at the village level (CDC) or the Community Organization (CO) (contractor) as the case may be, will provide the framework needed to ensure that there are checks and balances and transparency in the procurement process including access to information related to procurement. The information related to procurement under the community contracts will be disseminated to the public. Such information will be provided in the notice board o f the village mosque, CDC office/CO notice board. Inaddition the information i s disclosed at large gathering o f villagers at meetings. Experience has shown that social audit 69 including participatory and transparent process i s the most powerful tool to ensure the funds are used for the purposes intended. 28. IDAproposes to carryout procurement review/audit o f 5 % o fthe community contracts. Part F. RetroactiveFinancing 29. IDA has provided a project preparation facility for the procurement o f services under the proposed project. Inaddition it has been agreed the civil works components and the consultant's contracts procured in accordance with IDA Procurement Guidelines and Guidelines for the Selection of Consultant's will be eligible for retroactive financing. All expenditure under the current Management Support Agreement (MSA) with UNOPS for design, preparation, procurement and construction supervision including payments to contractors up to an amount o f US$18 million will be eligible for retroactive financing. Inorder to mitigate such risk IDA has agreed with the recipient to prior review all the civil works contracts independent o f value and consulting contracts estimated to cost more than: (i)US$50,000 for individuals; and (ii) US$lOO,OOO for firms. 70 Attachment 1 Detailsof the ProcurementArrangement involvingInternationalCompetition A Goods andWorks andNon-ConsultingServices (a) List o f contract Packages which will be procuredfollowing ICB and direct contracting: z$zzqz - - 1 2 6 7 8 9 Ref. Contract Cost US$ Method Domestic Review Expected Comments No. (Description) Preference by Bank Bid- (yedno) (Prior/ Opening Post) Date 7 no. vehicles, 5 For MPW and 2 for MRRD 1 Diesel 4 slender Prior Review 15-Apr-08 DoubleCabin 0.210 Yes All vehicles will be - Pickup4WD) used in Regions 3 no. software 2 Civel Cad and 1 For MPW no.primavera 0.018 NO Prior Review 01-May-08 software 3 GIS Software For MPW and - 0.0160 DC NO NO Prior review 01-May-08 MRRD (b) ICBDJCB Contracts for works estimated to cost above US$500,000 equivalent per contract, for goods above US$200,000equivalent per contract and all direct contracting will be subject to priorreview by the Bank. Communities may follow Direct Contracting procedures for sub projects inaccordance with the project Implementation manual. B. ConsultingServices. (a) List o f ConsultingAssignments with short-list o finternational firmsDJGOs. 71 Ref. No. Descriptionof Estimated Selection Review Expected Comments Assignment Cost in Method by Proposal Bank Submission US$ (m) (Prior/ Date Post) ImplementationConsultantfor Technical evaluationhasbeen MRRDandMoPW 7.560 QBS Prior 27-Sep-07 completedandworking on draft - N/A evaluationreport (expertiseintransport economy, ruralroadmanagementand MRRD/ sociology) and Capacity 3.253 QBS Prior 1-March-08 E10 will be issuedOctober25,2007 WB/018 Buildingfor MRRD,MoPW and 9/KE?W8 PrivateSectors (Contractors and 6 EngineeringFirms) 3 TechnicalAudits 0.300 QBS Prior 15-Jan49 Individuals 4 Policy developmentworkshop sss The draft contract i s preparedand facilitation laborbased options. 0.030 Prior 25-Sep47 will be sent to WB for NOL MRRDi NOL for contract hasbeenobtained WB/024 sss 15-0ct-07 from the Bank 4/KBW8 0.004 Prior 6 Projectimplementationmanual MRRD/ EMPand monitoringand WB/019 evaluationof Safeguardsaspects 2KBW8 (3 years) 0.648 QBS Prior 15-Jan-08 6 Baselinesurvey (and repeater 18 5 to 24 months after) o,324 QBS Prior 1-Aug-O8 (b) Consultancy services estimatedto cost above $100,000 or equivalents per contract and all Single Source selection o f consultants and estimated to cost US$ 50,000 for individual for assignments will be subject to prior review by the Bank. (c) Short lists composed entirely of nationalconsultants:Short lists o f consultants for services estimated to cost less than $50,000 equivalent per contract may be composed entirely o fnational consultants inaccordance with the provisions o fparagraph 2.7 o f the Consultant Guidelines. 72 ProcurementPlan A General A1 Projectinformation: Country: Afghanistan Recipient: Islamic Republic o f Afghanistan Project Name: National Emergency Rural Access Project Project ImplementingAgency: MRRD& MoPW A2 Bank's approvalDateofthe procurementPlan:November 7,2007 A3 Dateof GeneralProcurementNotice: December 26,2006 A4 Periodcoveredbythis procurementplan: 18Months B. GoodsandWorks andnon-consultingservices. B1 PriorReview Threshold:Procurement Decisions subject to Prior Review bythe Bank as stated inAppendix 1to the Guidelines for Procurement: I Procurement I PriorReviewThreshold ($) IComments I 1. Goods 200,000 Equivalentor more 2. Works 500,000 Equivalentor more 3. DirectContracting(Goods andWorks) All Other than community contracting 4 Community Contracts B2 Referenceto (if any) Project OperationaVProcurementManual: IDA B3 Any Other Special ProcurementArrangements: B4 ProcurementPackageswithMethodsand Time Schedule [List the Packages which require Bank's prior review first and then the other packages] 73 I t- I l- 2 :: I2 If: 2 e IY t; z0 z. 3 0 3 0 0 0 3 N 0 T I N N N 0 co x 3 + Lo I I I I ! E E E I$ I2 IE I2 um um Z z - g If m N m h .-.-ax * 0 * * ri u I I I I 3 N I . m P 4 4 m ? 4 d 2 zE zE 2!i 2E I '2 I: I: 2 : : I:Z O x IB /e n Z x I2 IB 0 0 0 0 0 0 O" s 8 0- i 2 - I -t- ' ; ; 1 I I . 8 8 E I2 IE 2 m 00 I T J z" I/ z" . l- 7- -r 8 $2B 7- E2 Z 0 P P Z 0 3z m V z 3z n lg 2Z 0 0 0 0 8 3 8 0 Vl I d d x T T I q- 4 P N 7- I 2 I:: 2 I:: z" lP 0 r r 3 0 8 0 - 0 0 0 $ 0 8 o \ m m ri W -I- - I - I T I T 3 5 Z 3 7 m g 0 0 -E 0 I% TT T I 4e m g 2 - 3 N II I .8 $ L. II 20 2> + z" Iz" 5 Iz" z" I! Z I Z 3z le:z u I-t t Z d s &IT q- I n $ m 2 9 Q 2 6 5E a I - 0 z 8 0 8 4 EE n I x J 8 e -x 'c) 8 c) m L, 6 a 'E: .. IP Y v) 4E3 .I Y u s 3 0) 3 eo c, .I v) u E eo & r m 2 h a2 u 3 c 0 3 4h .I Y t2 I a2 u m Q) u r I I 1 - cm Q\ ' I N 8 e 'C 8 " L P I E I i 0 ~ + I D Implementing Agency CapacityBuildingActivitieswith Time Schedule D1. Inthis section the agreed Capacity BuildingActivities. Inadditionto the programconducted by IDA, it is proposed that MRRD/NSP staff involved in the procurement activities o f the MRRD/NSP to be nominated to participate at international level training programs for goods/works and consulting services. No. Expectedoutcome/Activity Estimated Estimated Start Comments Description cost Duration Date 1 Training inProcurementof civil 20,000 Three TBD works (one each fromMRRTYMPW) weeks D2 Agreed Procedures for NationalCompetitiveBidding Inorder to ensure economy, efficiency, transparency andbroadconsistency withthe provisions o f Section Io f the Procurement Guidelines, the following criteria shall be followed inprocurement under National Competitive Biddingprocedures: (i) Standard biddingdocuments approvedby the World Bank shall be used. (ii) Invitationstobidshallbeadvertisedinatleastone(1) widelycirculatednationaldaily newspaper and biddingdocuments shall be made available to prospective bidders, at least twenty eight (28) days prior to the deadline for the submission o fbids. (iii) Bids shall not be invited on the basis o f percentage premium or discount over the estimated cost. (iv) Biddingdocuments shall be made available, by mail or inperson, to all who are willing to pay the requiredfee. (v) Foreignbidders shall not be precluded from bidding. (vi) Qualification criteria (in case pre-qualifications were not carried out) shall be stated on the bidding documents, and if a registration process is required, a foreign firm determined to be the lowest evaluated bidder shall be given reasonable opportunity of registering, without any hindrance. (vii) Bidders may deliver bids, at their option, either inperson or by courier service or by mail. (viii) All bidders shall providebidsecurity or a bidsecurity declaration form as indicated inthe biddingdocuments. A bidder's bid security or the declaration form shall apply only to a specific bid. (ix) Bids shall be opened inpublic inone place preferably immediately, but no later than one hour, after the deadline for submission o fbids. (x) Evaluation o f bids shall be made in strict adherence to the criteria disclosed in the biddingdocuments, ina format, andwithin the specified period, agreed with the Association. (xi) Bids shall not be rejected merely on the basis o f a comparison with an official estimate without the prior concurrence o fthe World Bank. 93 (xii) Split award or lottery in award o f contracts shall not be carried out. When two (2) or more bidders quote the same price, an investigation shall be made to determine any evidence of collusion, following which: (A) if collusion is determined, the parties involved shall be disqualified and the award shall then be made to the next lowest evaluated and qualified bidder; and (B) if no evidence o f collusion can be confirmed, then fresh bids shall be invited after receivingthe concurrence o f the World Bank; (xiii) Contracts shall be awarded to the lowest evaluated bidders within the initial period o f bid validity so that extensions are not necessary. Extension o f bid validity may be sought only under exceptional circumstances. (xiv) Extension o f bidvalidity shall not be allowed without the prior concurrence o f the World Bank (A) for the first request for extension if it i s longer than eight (8) weeks, and (B) for all subsequent requests for extensions irrespective o f the period. (xv) Negotiations shall not be allowedwith the lowest evaluated or any other bidders. (xvi) Re-biddingshall not be carried out without the World Bank's prior concurrence; and (xvii) All contractors or suppliers shall provide performance security as indicated in the contract documents. A contractor's or a supplier's performance security shall apply to a specific contract under which it was furnished 94 Appendix 7: FinancialManagementArrangements CountryIssues 1. The Bank has gained substantial experience and understanding o f the financial management environment in Afghanistan through the large number o f projects under implementation over the past four years. The Public Administration Capacity BuildingProject (PACBP) i s the primary instrument to continue and enhance the fiduciary measures put inplace during the past years to help ensure transparency and accountability for the funding provided by the Bank and other donors. 2. A PFMperformance rating system using28 high-level indicators that was developed by the Public Expenditure and Financial Accountability (PEFA) multi-agency partnership program was applied in Afghanistan in June 2005. PEFA i s comprised o f the World Bank, IMF, EC, and several other agencies. The system is structured around six core dimensions o f PFM performance: i)budget credibility, ii)comprehensiveness and transparency, iii)policy-based budgeting, iv) predictability and control in budget execution, v) accounting, recording, and reporting, and vi) external scrutiny and audit. Afghanistan's ratings against the PFM performance indicators generally portray a public sector where financial resources are, by and large, being used for their intended purposes. This has been accomplished with very high levels o f support from international firms; this assistance will continue to be needed over the medium term ifthese ratings are to be maintained. There i s also muchroom for improvement. 3. In spite o f undeniable gains made in reconstruction since the end o f 2001, the challenges facing Afghanistan remain immense; not least because o f the tenuous security situation in the region and continued prevalence o f a large illegal and illicit economy. The policy framework benchmarks have not yet been fully costed so various priorities are funded through the annual budgeting process. The rising costs o f the security sector constitute the major constraint on attainment o f fiscal sustainability. With regard to executive oversight, the national assembly will play an increasingly active role. All inall, the new national strategy has created highexpectations o f the executive which couldprove to be quite difficult to meet. 4. The public sector, in spite o f considerable efforts to reform its core functions, remains extremely weak outside o f Kabul. The lack o f qualified staff in the civil service and the absence o f qualified counterparts in the government after 30 years o f war and conflicts i s a binding constraint. Delays in reforming the pay structure and grading o f civil servants have severely crippledthe public administration o f the country. Domestic revenues lag behind expenditures by a factor o f ten to one. Large-scale corruption could emerge to undermine the government's efforts to enhance aid flows through national accounts. Capacities to track expenditures and monitor expenditure outcomes have improved, but they need rapid and substantial strengthening if progress toward the attainment o f national development targets i s to be monitored. Currently, 75% o f external revenues bypass government appropriation systems. 5. The World Bank i s financing a Financial Management Advisor to assist the Ministry o f Finance, an Audit Advisor to assist the Control and Audit Office, and a Procurement Advisor to assist inProcurement-related activities. Also an Internal Audit function i s being developed within the Ministry o f Finance with World Bank financing. USAID, and earlier the Indian Aid Assistance Program, i s financing a team o f consultants and advisors to assist the Da Afghanistan Bank in local as well as foreign currency operations. The activities carried out under the existing Public Administration projects have helped the Government to ensure that appropriate fiduciary 95 standards are maintained for public expenditures, including those supported by the Bank and the donor community. 6. Progress has been slower than expected in shifting from operations support provided by the three Advisors to capacity development and knowledge transfer to the civil servants. Given that, i s expected that the Advisors will continue to be required for the medium term. Challenges still remain in attaining the agreed upon fiduciary standards and also to further enhance them. And to make matters more complex, the regulatory environment in Afghanistan has advanced significantly in the past three years. Unfortunately, even mastery o f basic shlls in the early environment does not fully qualify the civil servants to work effectively in the new emerging environment. RiskAssessmentandMitigation 7. The table below identifies the key risks that the project may face and indicates how these risks are to be addressed. The overall FM risk rating i s high but the residual risk rating after application o f the mitigatingmeasures i s substantial. Risk Risk RiskMitigationMeasures Rating negotiations, Board or Effectiveness Inherent Risk Country Inherent Risk M M N Source - PFMstudy Project Financial H Minimize use of Designated ManagementRisk Account, maximize direct payments to consultants; key fiduciary functions to be performed by an Implementation Consultant PerceivedCorruption H Government commitment, internal controls and new internal audit will help to reduce the highlevel o f perceived corruption OverallInherent Risk H I Control Risk 1.Weak Implementing S Utilization o f the services o f Entity an Implementation Consultant. Presence o f qualified and 96 Risk Risk RiskMitigationMeasures Condition o f Rating negotiations, Board o r Effectiveness (Y/N) responsible for overall project/program coordination. This unit will be headed by a full time and qualified project administrator. Oversight functions to be performed by an inter- ministerial Steering Committee, chairedby the Minister o f Finance. 2. Funds Flow S Payments will be made to M N consultants, Suppliers, etc. from the DesignatedAccount (DA)by SDU-MoF or from the Float Account (FA) for those activities managed supervised by the IC. In addition to payments out o f DA finds, the implementing entities can also request the SDU to make i)direct payments from the Credit Account to contractors, consultants or consulting firms, and ii)special commitments for contracts covered by letters o f credit. These payments would only be made by SDU after due processes andproper authorization from the respective component implementing entities. A budget committee willbe M N appointed to coordinate the preparation of annual work plan and the derivation o f annualbudget there from. It will include representatives from MRRD, MPW, N C U and the IC, and shall report to the inter-ministerial Steering Committee. Will follow international M N standards. Project accounting procedures and details o f the FMarrangements willbe documented inan FMsub- manual to be preparedby the I C and approvedby the Bank 97 Risk RiskMitigationMeasures Conditionof Rating negotiations, Board or Effectiveness (Y/N) 5. InternalAudit H Newly-created internal audit S N department will review project internal control systems 6. ExternalAudit H Willbe auditedby CAO with S N support fromAudit Advisor 7. Reporting and Monitoring H Strengthening the SDUi s a S N priority under the new FM Advisor contract, to provide informationthat will comply with agreed format o f financial reports. This willbe facilitated bythe computerized accounting system that will be utilized by the Implementation Consultant to maintain records and generate required reports. Overall ControlRisk H S DetectionRisk S Adequate accounting, M N recording, and oversight will be provided inproject procedures. Accounting/Recording/oversi ghtby SDU-MoF o f all advancesm-16 supportedby Financial Management Advisor. Riskrating: H=high risk; S=substantial risk; M=modest risk;L-low risk StrengthsandWeaknesses Strengths 8. The Government provides assuranceto the Bank and other donors that the measures inplace to ensure appropriate utilization o f funds will not be circumvented. The Government support for PACBP is strength in itself to enhance financial management in Treasury operations, public procurement, internal audit in the public sector, and external audit by the Auditor General. A specific strength o f the project i s that this i s a follow-up project, and that it already has a number o f mechanisms inplace which will significantly reduce the financial risks associated with a large national program. 98 Weaknessesand Action Plan 9. The main weakness inthis project, as in many others inAfghanistan, i s the ability to attract suitably qualified and experienced counterpart staff especially for Financial Management. The utilization o f an Implementation Consultant, additional staff to be funded by the project, together with intensive training programs included inthis project, is expected to strengthen the fiduciary arrangements. ActionPlan Significant Action ResponsableAgent Completion Weaknesses Date Appointment o f an MRRD&MPW Before Shortage o f qualified Implementation effectiveness Consultant. and experiencedFMstaff Project internal controls FinancialManagement Implementation Within three and procedures need to be sub-manual developed Consultant months o f defined IC's appointment Interimreports needto Un-audited interim IDA/MoF/MRRD/MPW Donebefore include required financial report formats negotiations information confirmed ImplementingEntity 10. The project will be implemented by the Ministryo f Public Works and the Ministry o f Rural Rehabilitation and Development. Both implementing line ministries will utilize the same Implementation Consultant to perform the key financial management functions, however, at mid- term review, Bank will assess the capacity o f the finance department o f both ministries, and if found satisfactory, they will assume full responsibility o f the financial management functions. In order to achieve this aim, the FM capacity o f both ministries would be strengthened from project inception, by the recruitment o f relevant FM professionals, regular training and provision o f required FMsystem. 11. Project oversight. An interministerial Steering Committee (SC), chaired by the Minister o f Finance (or his representatives) and comprising ministers (or their delegates) o f Public Works, Rural Rehabilitation and Development and sectoral ministries involved as the main beneficiary ministries in the project (agnculture, basic education, health), will be responsible for the overall policy, strategic planning and project oversight and for integration with other rural development programs. Observers such as local authorities, donors, financing agencies representatives and experts would be invited to attend the SC as required. The SC will meet regularly, at least once per semester and on an ad hoc basis when required. To facilitate the work o f the SC a small secretariat will be put inplace at the Ministry o f Finance that would be responsible for coherence with the NEW program and for reporting to the government and the donors involved in the sector. 12. Project coordination and monitoring. Given the emergency nature o f the project, the strategic importance o f the project, initial step to a larger program, the large number o f activities, to be completed within a short time frame, and the still limited capacity o f the government on coordination and monitoring aspects, the following institutional arrangements have been agreed 99 to ensure that funds disburse quickly, multisectoral objectives are reached, and absolute transparency i s maintained. 13. A small and efficient national coordination unit (NCU) will be set up by ministerial decree within the Ministry o f Finance and will be responsible for overall coordination o f the entire NEWprojectandprogram. TheNCUwillinparticularensuredonorcoordinationwhichwill be a key element o f a sustainable and smooth multi year programmatic approach. It will be headed by a full-time project administrator (senior project management specialist to be recruited on a competitive basis) who will be responsible for day-to-day coordination o f the project. The NCUworks incoordination with the concerned departments andor the ProgramImplementation Unit (PIU) inMPW and MRRDand the other relevant ministries and agencies involved inrural development. It has the main function of monitoring and evaluation o f the overall project implementation and reporting consolidated progress to the SC. It i s also responsible for (a) assuring steady progress o f execution in accordance to an implementation schedule reviewed and approved by the World Bank, (b) regular reporting to the SC, (c) monitoring implemented activities included in the contracts o f the international implementation consultant (IC) and capacity building consultant (CBC) to ensure adequate and smooth transfer o f skills to the national staff, and (d) ensuring that a high ethical standard and transparency i s maintained throughout the process. 14. To ensure better coordination, a Technical Committee chaired by the N C U and composed o f the focal points o f beneficiary ministries and implementing bodies (IC and PIU in the case o f MPW, DRR and IC inthe case o f MRRD) will be established prior to project effectiveness. The Coordination Committee will meet on a regular basis and at least monthly in order to ensure adequate technical coordination and communication between ministries and implementing entities at the implementation level. 15. The Implementation Consultant shall have qualified and experienced financial management staff, and will work closely with the Director o f Finance, MRRD and the Director o f Planning, M P W to carry out day-to-day financial management operations o f the project, preparation o f M- 16 forms (payment orders), project coding sheet, B27 allotment form and overall contract and project management. Detailed working relationships between the I C and MRRDMPW finance departments, IC's FMreporting requirements, staffing, systems and other FM arrangements will be included inthe IC's contract. Budgeting 16. A budget committee will be appointed to coordinate the preparation o f annual work plan and the derivation o f annual budget. This committee will be made up o f representatives from the MRRD,MPW, NCUandthe IC, and shallreportto the inter-ministerial SteeringCommittee. The Budget Committee shall also coordinate quarterly budget reviews to ensure adequate budget discipline and control. The committee will be responsible for ensuring that project expenditures for each fiscal year are captured inthe Governmental Development budget o fthat fiscal year. The MRRDand MPW must get approvals from the presidential office and the parliament and attach them to B27 and PCS forms at the time o f requesting yearly allotments for contracts under the project to avoid delays inpayment processing. 100 FundsFlow 17. The standard h d s flow mechanism in Afghanistan, similar to other ongoing projects, will be followed inthis project. Project funds may be advanced to the Designated Account (DA) to be opened at the Da Afghanistan Bank (DaB) and operated by the Special Disbursement Unit (SDU) in the Treasury Department of MoF. Requests for payments from the DA will be made to the SDU by the MRRD and MPW when needed. From the DA an advance o f not more than US$ 6million will fund a `float account' (FA) to be managed by the I C and from which payments will be made for all activities and works supervised by the IC. . 18. Retroactive financing o f up to US$18 million i s envisaged for project-related expenditures related to start-up activities during the 7 months prior to signing o f the Grant agreement. Retroactive financing can be disbursedonly after the grant becomes effective. 101 Legalrequirementsfor authorizedsignature 19. Ministryo f Finance has authorization to authorize disbursement from the Grant. Specimen signatures o f authorized signatories inM o F are on file with the Bank. Accounting 20. The SDU will maintain a proper accounting system o f all expenditures incurred along with supporting documents to enable IDA to verify these expenditures. The FM staff o f the IC, MPW and MRRD will: i)supervise preparation o f supporting documents for expenditures, ii)prepare payment orders (Form M16), iii)obtain approval for M-16s by the Minister or Deputy Minister depending on the payment amount, and iv) submit them to the Treasury Department in M o F for verification and payment. Whilst original copies o frequired supporting documents are attached to the Form M16, the project i s required to make and keep photocopies o f these documents for records retention purposes. The FM Advisor in the MoF/SDU will use the government's computerized accounting system, AFMIS, for reporting, generating relevant financial statements, and exercising controls. 21. The IC, MRRDand MPW FM staff will maintain essential project transaction records using computerized accounting systedExce1 spreadsheets and generate required monthly, quarterly, and annual reports. 22. The FMsub-manual, to be preparedby the I C within three months o f appointment, andto be approved by the Bank, will include: i)roles and responsibilities for all FM staff, ii) documentation and approval procedures for payments, iii)project reportingrequirements, and iv) quality assurance measures to help ensure that adequate internal controls and procedures are in place and are being followed. 23. The FM sub-manual will also establish project financial management in accordance with standard Afghan government policies and procedures including use o f the government Chart o f Accounts to record project expenditures. The use o f these procedures will enable adequate recording and reporting o f project expenditures. Overall project accounts will be maintained centrally in SDU, which will be ultimately responsible for recording o f all project expenditures and receipts in the Government's accounting system. Reconciliation o f project expenditure records with MoFrecords will be carried out monthly by the I C together with MRRDand MPW. InternalControl& InternalAuditing 24. Project-specific internal control procedures for requests and approval o f funds will be described inthe FMsub manual including segregation o f duties, documentation reviews, physical asset control, and cash handlingand management. 25. The Head o f the FM Department o f MRRD and MPW will be responsible for coordinating FMactivities o ftheirrespectiveproject components with the SDU. 26. Annual project financial statements will be prepared by SDU/MoF detailing activities pertaining to the project as separate line items with adequate details to reflect the details o f expenditures within each component. 103 27. The project financial management systems will be subject to review by the newly- established internal audit directorate o f the MoF, according to programs to be determined by the Director o f InternalAudit usinga risk-based approach. ExternalAudit 28. The project accounts will be audited by the Auditor General, with the support o f the Audit Advisor, with terms o freference satisfactory to the Association. The audit o fthe project accounts will include an assessmento fthe: (a) adequacy o fthe accounting and internal control systems; (b) ability to maintain adequate documentation for transactions; and (c) eligibility o f incurred expenditures for Association financing. The audited annual project financial statements will be submitted within six months o f the close o f fiscal year. All agencies involved in implementation and maintaining records o f expenditures would need to retain these as per the IDA records retention policy. 29. The following audit reports will be monitored each year in the Audit Reports Compliance System (ARCS): ResponsibleAgency Audit Auditors Date MoF, supportedby Special SOE, ProjectAccounts and Auditor General Sep 22 Disbursement Unit DesignatedAccount 30. The related projects, NEEP and NEEPRA have no over due audit reports; key issues raised intheseprojects previous audit reportshavebeenresolvedsatisfactorily. FinancialReporting 31. Financial Statements and Project Reports will be used for project monitoring and supervision. Based upon the FM arrangements o f this project Financial Statements and Project Reports will be prepared monthly, quarterly, and annually by the I C together with MRRD and MPW.These reports will beproducedbased onrecords kept on the IC's computerized accounting systemand MRRDhiPW's Excel spreadsheets after due reconciliationto expenditure statements from SDU (as recorded inAFMIS) and bank statements from DAB. 32. The quarterly Project Reports will show: (i)sources and uses o f funds by project component, and (ii) expenditures consolidated and compared to governmental budget heads o f accounts, the project will forward the relevant details to SDUDBER with a copy to IDA within 45 days o f the end o f each quarter. The government and IDA have agreed on a pro forma report format for all Bank projects; a final customized format for NERAP will be agreed prior to project negotiations. 33. The annual project accounts to be preparedby SDU from AFMIS after due reconciliationto records maintained at the project, will form part o f the consolidated Afghanistan Government Accounts for all development projects. This i s done centrally inthe Ministry o f Finance Treasury Department, supported by the FinancialManagement Advisor. 104 DisbursementArrangements 34. Disbursements procedures will follow the World Bank procedures described in the World Bank Disbursement Guidelines and the Disbursement Handbook for World Bank Clients (May 2006). Table 1shows the allocation o f IDAproceeds ina single, simplified expenditure category and Table 2 presents the expected co-financing. The single category for "goods, works, consultancy services, training, and operating costs" i s defined inthe financing agreement. Project funds will be disbursed over 36 months. The closing date o f the project will be December 31, 2010with a final disbursement deadline four months after the closingdate. 35. During this additional 4-month grace period, project-related expenditures incurred prior to the closing date are eligible for disbursement. Table 1: IDA Financingby Category ofExpenditure(US$ million) Amount ofthe Financing Expenditure Category GrantAllocations Percentage (US$) (including taxes) Goods, works, consultants' services, training, Routine 111,500,000 100% Maintenance Grants, and Incremental Operating Costs 500,000 (2) PPF Refinancine: Total - Table 2: EstimatedCo-financing(US$ million) IDA ARTF JSDF Beneficiaries Total 112 388 500 36. SummaryReports. Summary reports inthe form o f Statements o f Expenditure will be used for payments from the Designated Account to contractors and suppliers for expenditures on contracts above US$25,000; all trainingprograms and operating costs regardless o f whether Bank procurement prior review is required or not. For all payments on contracts > $25,000 fi-om the DA to contractors and suppliers, source documentation is required. For advances/reimbursements to the FA (see below) an expenditure report, prepared by the I C in accordance with procedures agreed with the MRRD and MPW constitutes the sufficient supporting documentation. Source documentation for payments transacted by the I C i s not envisaged. If it becomes necessary to support the IC's expenditure reporting with contractor documentation, that additional support may be requested subject to the disbursement letter being modified. DesignatedAccount 37. The legal agreement will contain provisions allowing for a single designated account that may be opened at DAB in U S dollars for a maximum amount o f US$ 16 million. The SDU will manage payments from and new advances/reimbursements to the DA. Cash advances may be 105 taken from the Designated Account, and held and managed by either MPW or MRRD. These agencies' controls for holding, accounting, and preparation o f Statement s o f Expenses (SOEs) have been satisfactorily assessed. New cash advances will only be made when all other prior cash advances have been justified through submission o f SOEs to the SDU. Monthly expenditure reportingfor payments made from the designated account i s required. 38. Float Account. Out o f proceeds o f the DA, an advance o f approximately an amount o f US$ 6 million will be made to the IC-managed float account (FA). Conditions for the FA will be spelled out in the consultant contract and the FM sub-manual. From the FA, payments to contractors for roads works will be authorized by the IC, subject to necessary approvals being obtained from MPW and MRRD, as outlined in the project FM sub-manual. Disbursement o f routine maintenance grants to the NSP blocks grant account will also be made from the FA, as will payments for all other IC-supervised activities. The I C should submit a monthly expenditure report to MPW and MRRD for approval and then for their submission to SDU so that the FA- financed expenditures can be included in the monthly DA reimbursement application and expenditure reporting. The basis for the advance to the FA will be the IC's contractual financial provisions - and multiple advances may be made up to the agreed contractual ceiling. The IC- prepared expenditure report i s considered a source document. In line with lightened fiduciary requirements under OP 8.50, supporting documentation in remote locations that cannot feasibly be routed to Kabul i s not required. Thus, the Bank will accept the IC's expenditure reporting by itself as an acceptable basis for disbursement. Contractors' source documentation (on site in provinces) i s not required to support the I C expenditure report. The IC's fees may not be paid out o f the FA.No bank statement or reconciliationo f the FA i s required. The advance to the FA will be reflected on the DA reconciliation statement. 39. Direct Payments. Third-party payments (direct) and Special Commitments will be permittedfor amounts exceeding US$200,000 and US$ 150,000 respectively. All such payments require supporting documentation in the form o f records (copies o f invoices, bills, purchase orders, etc.). Issuance o f SCs i s unlikely. With direct payments, the Bank will apply this minimum flexibly when implementation needs or urgent payment priorities override strict application o f the minimum threshold - provided however that expenditure reporting on the DA i s being submitted on a regular monthly basis. 40. Disbursement for Routine Maintenance Grants. Under the Routine Maintenance Component, IDA will finance block grant disbursements, channeled through the NSP block grants account and ultimately channeled through communities similar to the flow o f funds on the National Solidarity Project. In this regard, IDA i s financing the grant and the underlying documentation attesting to the Routine Maintenance Grant would be the grant financing agreement to be retained either at the community/village level or elsewhere if community/village level document retention i s not feasible. Disbursement o f Routine Maintenance Grants would be reported on via submission o f a statement o f expenditure. 41. Preparation of Withdrawal Applications. MRRD and MPW will prepare Summary Reports (Statements o f expenditures) for expenditures paid from the DA and will review/approve the expenditure reports prepared by the I C for expenditures paid from the FA and forward those reports to the SDU for further processing and consolidation as a reimbursement application. The SDU will review withdrawal applications for quality and conformity to Treasury procedures, and then obtain signature. Selected IC, MRRD, MPW and SDU finance staff will be registered as users o f the World Bank Web-based Client Connection system, and take an active hand in managing the flow o f disbursements. 106 FinancialManagementCovenants e M o F shall submit audited financial statements for the project within six months o f the end o f each fiscal year. The Project's audit report will cover the financial statements, the Designated Account, and SOEs, in accordance with terms o f reference agreed with the Association. e Un-audited project interim financial reports will be submitted by MRRD/MPW on a quarterly basis to the World Bank and a copy to SDU-MoF within 45 days after the end o f each quarter. SupervisionPlan 42. Duringproject implementation, the Bank will supervise the project's financial management arrangements. The team will: e Reviewthe project's quarterly un-auditedinterim financial reports as well as the project's annual audited financial statements and auditor's management letter. e Review the project's financial management and disbursement arrangements (including a review o f a sample o f SOEs and movements on the Designated Account and bank reconciliations) to ensure compliance withthe Bank's minimumrequirements. e Review agency performance in managing project funds to ensure that it i s timely, accurate, and accountable. Particular supervision emphasis will be placed on asset management and supplies. 0 Review o f financial management risk rating and compliance with all covenants. Conclusion 43. The FM arrangements, including the systems, processes, procedures, and staffing are adequate to support this project- subjectto implementation o f the items listed inthe actionplan. 107 Appendix 8: MonitoringandEvaluationArrangements MainObjectives: 1. The monitoring and evaluation (M&E) system for the project is intended to provide information to the relevant stakeholders on project implementation performance, process, outputs, and outcomes. The main purpose o f the monitoring system i s to provide timely feedback to key decision makers, so that lessons can be learnt on a real time basis and corrective measures initiatedwhen necessary. 2. The project's M&E system will be based on the six components: (a) implementation monitoring, (b) post-implementation monitoring, (c) community participatory monitoring, (d) a baseline survey and an impact evaluation, (e) Mid term review, and (f) an external evaluation study at the end o f the project. In addition, as an activity o f Component C, studies will i.a. be conductedinorder to establish rural roads management system and maintenance mechanism. 3. To assess whether the NERAP i s meeting its objectives, key performance indicators have been developed (See Appendix 1: Results Framework and Monitoring). Regular supervision and a mid-tern review will be conducted by IDA to measure the achievements against these key indicators. B.InstitutionalArrangement for M&E 4. The MPW PIU will be responsible for monitoring Component A, while MRRD PIU will monitor Components B and C. The M&E focal points o f both PIUSwill be responsible for coordinating the M&E tasks, liaising with the IC, as well as regional M&E staff and provincial engineers in the collection and reporting o f the required data. The monitoring data will be continuously updated and consolidated quarterly for provision to the Bank task team, and will be made available to coincide with the supervision missions o f the project. The PIUs will develop reporting forms and propose them to the N C U coordinator based on the indicators in the Appendix 1:Results Framework and Monitoring8,which will be then used ineachPIUreporting. C.ImplementationMonitoring 5. The primary objective i s to monitor the progress o f the projects based on the measurable outcome/outputs as listedinthe Appendix 1: Results Framework and Monitoring. 6. The provincial engineers will continue to be responsible for the implementation monitoring, focusing on inputs, process and output level, using the project roads as well as benefiting communities as the basic unit o f monitoring. The provincial M&E staff will prepare a brief monthly field report on the implementation status. 7. At the regional office level, the regional M&E staff will prepare a monthly report based on the provincialreport, whichwill bethen submittedto each PIU. 8. At the national level, the M&E focal point o f each PIU will consolidate the reports from the regional office and will feed the information into the Management Information System. The M&E focal points will prepare quarterly progress reports, which will then be consolidated by each PIU, with support from the IC, as the overall program report. The report will be submittedto 8A provision will be made to hire short-termconsultant to develop reporting forms, ifnecessary. 108 the NCU, while its summary will be distributed to key stakeholders, including the Steering Committee and donors. Moreover, the M&E focal points will visit the project roads directly on random sample basis for cross checking o f the reports submitted. C. Post-implementationmonitoring 9. The objective o f this monitoring i s primarily to assess the sustainability o f the road works after completion o f works. Duringthe liability period (6 months to 1 year), this will be carried out by the provincial and regional M&E staff, who will follow up with the contractors immediately if there i s any deficiencies observed. The technical sustainability of the road improvements will remain a major challenge. Under NEW,a strategy for maintenance will be developed and routine maintenance will be contracted to CDCs. It i s expected that the post- implementation monitoring will be introduced inline with the strategy. D.Communityparticipatorymonitoring 10. Reflecting that focus will be placed towards the community-led management and maintenance, community participatory monitoring will be introduced. The social inclusion unit will ensure the participation o fbeneficiary communities inthe implementation and monitoring o f Level 1 projects. Community participation will ensure better accountability o f contractors, road user groups and the PIUs staff, thus creating transparency on the use o f funds, while ensuring community engagement and appropriate targeting o f the poorest households in Level 1 road rehabilitation and maintenance. 11. The social inclusion unit will use the CDC as the entry point (where a CDC does not exist any other existing community based organizations will suffice) for undertaking community based participatory monitoring to (i) assess progress based on a few and simple selected key process and output indicators; and (ii) conduct regular social audits to provide brief quantitative reports on the community perceptions and social results including the potential impact on crop diversification, generated by the road access The social inclusion unit will prepare (i) a monthly report on the findings and submit this to the regional office; (ii) conduct at least 3 social audits per-quarter and; (iii)provide quarterly progress reports regarding level 1 works and community participation.. E.BaselineSurveyandimpactevaluation 12. It i s proposed that a baseline study will be carried out with the help o f the Vulnerability Assessment Unit (VAU) o f MRRD, which has extensive experience from the administration o f the National Risk and Vulnerability Assessment (NRVA) and from participation in the NSP impact evaluation. Key data will include accessibility, local price levels, traffic counts, road passability and travel times. Data collection for the baseline study will take place in early 2008. The baseline survey will collect household level information on transport and travel needs, income and expenditures patterns, asset ownership, income and crop diversity, employment as well as access to markets, health and education services. The survey i s administered at the household level in order to capture the distribution o f transport costs and benefits from transport improvements across different socioeconomic groups and across genders. Recognising the role the development o f the road network can play in improving access to markets for labour and agricultural commodities the survey will also look at current levels o f diversification o f income and cropping patterns. 109 13. NRAP has so far not camed out an impact evaluation and has relied on anecdotal evidence to argue that interventions have a positive impact on the rural population. To remedy this situation, NERAPwill undertake a rigorous impact evaluation o f its projects. Inorder to identifythe effects o f NERAP projects on outcomes o f interest and to generate evidence-based recommendations on how the structure o f the program may be adapted to more efficiently meet program goals, a rigorous impact evaluation o fproject effects andrelated interventions will be implemented across the life-cycle o f the project.. The impact evaluation will focus on estimating two core effects: (i) Project Effects; and (ii) o f Complementary InputInterventions (CII). Effect 14. Project Evaluation: The Project Evaluation seeks to provide evidence-based recommendations to the Government and donors on the efficacy o f project activities. The methodology for the Project Evaluation i s centered on the identification o f a control group (communities which do not receive road improvements through NERAP) and a treatment group (communities which do receive road improvements through NEW) prior to the start o f the works. In order to limit contamination o f estimated effects by selection biases', it i s important that communities o f treatment and control groups face, on average, an identical probability o f being includedinthe project. Given that the investment plan for NERAP i s mostly fixed and that randomized selection o f treatment areas are potentially precluded, -which could mitigate the selection bias problem a control group will have to be identified through statistical matching - algorithms, such as propensity-score matching or synthetic-matching. These statistical techniques can create artificial control groups from a combination o f existing villages in the sample. The baseline will be significantly larger than subsequent follow up surveys inorder to ensure adequate balance o f general characteristics across treatment and control groups and avoid mismatches between treated and control units. Project effects will be estimated by a comparison o f outcome means across treated and control villages, before and after NEW. 15. Complementary Input Intervention (CIq Evaluation: The CII Evaluation seeks to provide evidence-based recommendations to the Government on the efficacy o f bundlingcomplementary interventions with road rehabilitation projects. The feasibility o f carrying out such an evaluation has not yet been established. If feasible, the NERAP CII Evaluation will focus specifically on interventions related to Intermediate Means o f Transport (IMTs). It i s envisaged that the Evaluation Team will partner with organizations involved inmicro-credit, such as Micro Finance Investment for Afghanistan (MISFA) to randomly allocate such IMT investments to units receiving NEW projects and areas not receiving N E W projects. This does not mean that IMTs will be included in the proposed project but the Evaluation Team will try to identify partners who are interested in working in parallel with the project. The C I I Evaluation will then employ difference-in-difference estimators to identify whether improvements in accessibility in rural areas are conditional on the provision o f road rehabilitation schemes, IMT-related investments, or both. F.Mid-termReview 16. Duringthe second year o f the project and no later than June 30,2009, a mid-tern review will be conducted inorder to assess whether the NERAPis achieving the objectives as planned, and to initiate corrective measures if deemed necessary. Prior to the mid-term review, a new assessment 'Selectionbias occurs iftreatment groups tend to be from areas with high growth potential or high traffic density. These areas could have grown faster even inthe absence o f the road rehabilitation leading the impact evaluation to over-estimate the impact o froads;. Alternatively, iftreatment areas tend to cover predominantly low income groups for whom road availability is one o fmany binding constraints on poverty alleviation, the result would be an under estimation o fthe average impact o froad rehabilitation in rural areas. 110 o f overall management and fiduciary aspects management capacities o f the ministries will be carried out. As appropriate, the government will contract a consultant (from grant proceeds) to review and assess progress in implementing the project and to assist in preparing the necessary documentation for the review. The steering committee through the N C U will be responsible for preparing the necessary documentation for the review and for planning the midterm review meeting. The midterm review will evaluate progress in reaching the NERAP and program objectives, and will identify measures to improve performance if needed. Careful attention will be paid to the performance in managing the technical and fiduciary aspects by the ministries in order to analyze the ways and means to transfer additional responsibilities to the ministry if deemed acceptable. Special attention will also be paid in addressing environmental and social issues and in designing and implementing the various activities. Specialists will assess the environmental and social impacts o f investments, both individually and cumulatively, and the adequacy o f safeguard procedures agreed for the project. The MTR will also review efforts to ensure good governance andreducerisk o f corruption. G.ExternalEvaluation 17. At the end o f the three years, an external evaluation will assess NEW'Simpact and provide recommendations for the rest o f the implementation o f the program. The evaluation will specifically assess whether the target set inAppendix 1:Results Framework and Monitoring have been achieved at the end o f the project, based on findings fkom the analytical works, the impact evaluation and monitoring records during the project. An independent external evaluation will also be carried out to evaluate the contract compliance o f the Implementation Consultant (annually) and the performance o f the Capacity BuildingConsultant. H.ManagementInformationSystem(MIS) 18. A full-fledged MIS i s already established and i s functioning reasonably well at the MRRD PIU, while that o f the MPW PIU needs further improvement to function more effectively. Neither o f the two systems i s currently used as a management tool but rather serves as data collection points. During the NERAP, the MIS o f both PIUs will be improved and it i s further envisaged that both systems shall integrate the National Rural Network Information. This integration would allow the PIUs to overlook the progress o f the project as a national program and to monitor the progress towards the targets set by the LANDS. 19. In addition to this the PIUs will incorporate the community level participatory monitoring indicators and collection into the MIS and reporting. 20. It needs to be ensured that the data collected will be analyzed and be used to inform management decisions at both ministryand N C Ulevel. 111 Appendix 9: SecurityRiskAssessmentandmappingof roads 1. The security situation in Afghanistan remains fluid and is currently deteriorating. Careful consideration was givenduringproject preparation to the possible consequences ifthe insurgency and criminal activities increase further. An analysis was carried out using the UN's Program Accessibility Map o f September 2007 which categorizes the country into three areas: low, medium, and high risk. The proposed roads were ranked according to their security risk and those roads in the high risk areas were reprogrammed for the second half o f the project, on the assumptionthat security will improve. 2. Following this ranlung, about 63% o f construction sites would be in low risk, 10% in medium, and 20% in high risk areas. Given the increasing overlap between opium production and insecurity this means that some o f the areas with the most intensive opium poppy cultivation cannot currenlty be prioritised by the programme. Nevertheless districts in which opium poppy cultivation has been widely grown (and may be return to in the future) such as in Balkh, Badakhshan and Nangarhar are already identified to receive assistance. The ministries will keep the risk assessmentup to date and would make adjustments as necessary. Even within an area the level o f threat can vary substantially and local intelligence i s vital. Therefore the communities would be muchbetter informed about the project than has been the case so far and every attempt must be made to built good relationships with the villagers who will often be the guarantors o f staff safety. 3. Government i s determined to deliver services across the country and the project would adapt its implementation in order to be present even in less secure areas. In those localities, the preferred delivery mechanism would be Level 1contracts which require less outside presence and bringdirect cashbenefits to the communities. 4. The Bank's ability to supervise the construction sites either directly or through consultants i s substantially limited. Even if a construction site would be considered safe, the approach routes might lead through highrisk areas. It is likely that the Bank would have to rely on third party auditors for verification. Community verification would also be used and an effective complaints mechanismwould be put inplace that would highlightirregularities and grievances. 112 Secunty level 1Lownsk Securty level 2 M e d i u m m k Secunty level 3 figh nsk Total Secunty level 1Low nsk Securty level2 Mediumnsk Secunty level 3 Highnsk Total Security level 1 Low risk Securty level2 Mediumrisk Security level 3 Highrisk Total 113 I-1 a k Appendix 10: CommunicationsStrategy Introduction 1. A communication strategy for the National Rural Access Program (NRAP) has been prepared by the Public Relations and Communications Unit (PRCU) o f the PDCU The strategy draws from previous experience o f NRAF'-PDCU. The communication strategy serves as a working reference tool, in order to raise awareness and identify key audiences, strengthen successful working relationships and secure hture fundingfor NRAP. 2. This strategy i s consistent with, and aims to achieve objectives o f the Government o f the Islamic Republic o f Afghanistan (GOA)and its commitments as expressed in the Afghanistan National Development Strategy (ANDs), and i s an example o f coordination and consistent intra- and inter-ministry communications. 3. Adopting a carefully considered communication strategy, to build public consensus and ownership o f the program remains an important element for the success o f the NEW and NRAP program as a whole. Widespread communication o f the program's objectives to the beneficiaries, and to the Afghan population as a whole, i s crucial to facilitate project implementation. Through a well designed communication strategy, the local communities would be made aware o f the Government's efforts to create vital links between the villages, the markets and primary services, such as health clinics and schools. Local signboards and information dissemination about the project implementation would also improve the accountability o f local authorities and facilitate the communication among the stakeholders. Background 4. The Afghan population i s widely dispersed and predominantly rural, with a rich and varied culture. Communication activities must consider local language, cultural, religious, tribal, and gender norms. News travels most often by word o f mouth inperson and often at the mosques, or by cell phone, significantly aided by radio news programming. Radio ownership is estimated at 83% and television ownership at 37%. Television access i s increasing as electrificationbranches out from the major cities and is quite popular, but power i s usually limited to a few hours a day. Internet availability i s estimated at 6%. Newspapers are rarely available outside o f provincial and district capitals and most are perceived to have political bias. The national literacy rate i s estimated at 37% for men and 10% for women, lower in rural Afghanistan". Afghans prefer to listen to dramas ahead o f other programming options. Afghan women have less access to radio than men, even if the radio i s withintheir own homes, thus half o f the populationhave little to no access to government communication. In order to ensure that security i s provided at the sub- project sites and that the infrastructures can be built, it i s important that local communities are well informed about the potential benefits o fthe project. Objectives 5. The communication strategy aims at improving the cost-efficiency and impact o f the project's communication activities and would mainly focus on (i) Communication to enhance projects effectiveness to achieve the intended operational results, (ii) Communication to ensure loAfghan Media - Three Years After producedinMay 2005 by USAID 117 transparency and accountability during project implementation, (iii)Communication for education, learning and dissemination o f informationto large audiences, (iv) Communication for effective coordination and cooperation, social and political mobilization, donors relations and institutional strengthening. The NERAP communication strategy will aim at the following objectives: Ensure that the objectives o f the program are well communicated and the project receives support from the beneficiary communities, government's stakeholders, as well as other donors. Improve understanding o f the project's scope and objectives to a broad audience and ensure local as well as national support for the project's activities. Buildtrust and confidence inthe GOA.All project phases are well documented; infomation on progress, delays, challenges and problems faced by the project or proposed works are communicated to the beneficiaries and stakeholders to ensure concerted solutions as well as maximum transparency and accountability. Create support for the Social Inclusion Unit's method of involving communities in the decision malung and project implementation processes; and create conditions for the awareness, interest, comprehension and acceptance o f the instrumental role that women play incommunity growthanddevelopment. Generate feedback from target and crucial audiences and channel this feedback to the decision makers. Inform the population on the employment opportunities generated by the project and the mechanisms to access these opportunities. Inform professionals about the project's standards and about educational opportunities available within the project. I . The role o f communication planning in NEW, NRAP as well as for other programs implemented in Afghanistan, has significantly broadened. While ensuring that key messages about the program design and impacts are widely disseminated and clearly understood remains an important aim, other factors such as building trust, facilitating dialog among all stakeholders, donors and other key actors have come to the forefront o f the communication needs. This implies that the objectives above will be achieved by setting up a two-way communication mechanism that goes beyond infomation dissemination. Key message 8. All key messages o f NEW will be interpreted in Dan and Pashto and will reflect consistency in meaning. These messages will be effective as long as they are accurate and supported by action. These messages will be communicated through words, imagery and drama. These messages transmitted to the people will reinforce the importance o f rebuilding o f the road network and connecting Afghan villages to markets and services, as part o f the reconstruction efforts and reconciliation process. These messages will reflect the shared vision, values and democratically-detemined priorities of the people. Messages will be regularly reviewed to ensure consistency with the Ministries' strategies. The key message to be disseminated is: NERAP's purpose is to rehabilitate rural roads which will jumpstart the legal rural economy, while targeting social protection groups, and building capacity within government ministries. Within the rehabilitation of rural roads, the most important goals are equity, connectivity, quality and sustainability. Wherever possible emphasis will be given to the role NEW plays in improving 118 access to government services such as health and education and inpromoting the development o f the legal (non opium) economy. MainActivities Internal Communications 9. Strong internal communications i s a priority to support operations, build teamwork and to create a sense o f shared mission. This will lead to consistent external communications. These communications can include ministerial visits to national and field offices, conferences and staff meetings, and e-mails. Meetings should end with a check-list to enforce timely follow-up on agenda issues. When field visits are made, the participants should follow up with a field report to be distributed to PIU and N C U staff members. These reports can be very brief to include key infomationand any necessary follow-up action to be taken. Strategic GovernmentCommunications 10. NRAP must participate in the development o f a strategic communication capacity with the MPW, MRRD and the GOAto ensure consistent networkmg. This networking must include internal and external communications. Press Releases 11. These releaseswill be issued on a regular basis highlightingPrograms' activities andholding media conferences as well as press events for sub-project inaugurations and commissioning. These press releases will be issued in Dari, Pushtu and English.The releases will be sent to all media by email. Press releases will include details o f an event, when it was held and where; why the event i s important to the public. Also, providing a quote from a senior official about the event i s an effective tool. Facts and figures and who attended the event i s important for the journalists, including brief background bullet-point facts such as information about the Program. Contact details, for questions and feedback must be included. Newsletter 12. NRAP has an established newsletter "Road" that is published every two months and i s distributed through the internet and by hard copy to its distributionlist o f government and donors. There are 650 recipients for the newsletter that includes 10 ministries, UN agencies, UNOPS regional offices, provincial directorate o f the MRRDand MPW, Governors' offices, Donors, both houses o f Parliament, some embassies, MPW, MRRD, Presidential Palace, the press, and two Chambers o f Commerce. Input for the Newsletter comes from field visits, interviews, PIU reports, Social Inclusion Reports and regional offices o f UNOPS. The newsletter "Road" will be re-vamped and incorporatenew ideas and graphics to further enhance the final product. News Bulletins 13. NRAP will initiate radio and TV bulletins on activities including inauguration or commissioning o f works. News bulletins will also provide information or explanations incase o f delays inworks execution, funding andor changes to project policies andor other issues inherent to the project. Media Liaison 14. NRAP representatives with strong communication shlls inDari, Pushtu and Englishwill be identified, trained for media interviews on NRAP, provide interviews to national and foreign radio, television and print agencies and beprepared to respond to media queries. 119 Production of video, radio andprint material 15. The Public Relations Communications Unit (PRCU) o f NRAP has developed a popular weekly series "Village connecting to Village" (Deh bad eh rah darad) that has aired more than 200 episodes on government and private radio stations. The PRCUhas also developed a plot TV version that could be aired weekly. NRAP's PRCU i s developing some additional scripts to include in the radio presentation including highly essential issues o f NR4P rural projects. The programwill aim at expanding the radio soap to TV, on at least a bi-weekly basis. The TV project will require sufficient funding and staff. Media Channels Pamphlets - Pamphlets using pictures and written dialogue will show the process, timeline and opportunities for people withinthe community. Signs - Signs with NRAP logo and the project name will be posted near the project or at a frequented area inthe community. Boards - Boards with project details for the community's information will be made available at project site or at a convenient location, accessible by the beneficiaries. 0 Posters - Posters will to be produced with pictures that are appealing to the community people and display the NRAP logo on them usingthe logo for image dissemination. 0 Letterhead-The letterheadwill display the NRAP logo to be designed inconsultation by MRRDandMPW. Media Monitoring 16. NRAP will have daily access to media monitoring o f Dan, Pushtu and English radio, television and print news coverage about NRAP, MRRD and MPW. A clippings file has been established to include local and regionalclippings o fitems printed inregionalpress. NRAP Information Kit 17. Briefing packs, similar to a press kit, on NRAP's activities are beingproduced to deliver key messages including donor contributions to the program. These briefing packs are necessary to inform the GOA and Donors o f NRAP's activities. Briefing packs are a very effective tool for presentations, events and fund-raising. The available data will be printed using graphics and photos to enhance the product and to attract the audience. Community Outreach Events 18. These events will be held to informrural communities o f Ministryactivities, gather feedback and encourage participation and debate on key issues. Gender-focused communications 19. NRAP communications products must have the potential to reach all Afghans. News and drama programs must be timed to air when women will hear them. NRAP can interface with the Ministryo fWomen's Affairs to findother effective mechanismso fcommunication. Web-basedcommunications 20. NRAP has established a website as o f September 1, 2006, www.nrau.gov.af. Web-based communications will be focused through this website and can also include emails to facilitating partners and discussion forums. This website will be updated on a timely basis to include the most current information about projects and availability o f employment to the afghan community. Although internet penetration i s only 6% at this time, it i s growing at a very steady rate in the country. 120 Principles 21. All communication sponsored or created by NRAP andNERAP will be communicated with integrity, ethics and transparency. The NRAP supports ethical communication standards in accordance with the rules o f the Islamic Republic o f Afghanistan. Transparency in all communication operations o fNRAP will be strictly enforced. 22. NERAP will promote its purpose and contributions made to the Islamic Republic of Afghanistan, while not excluding its' partnerships. NRAP will promote the ideal o f a stable and worlung government to the communities. 23. ms national media campaign aims to increase overall public awareness abut the NRAP program, its' ongoing activities and achievements to date, with specific emphasis on community awareness regarding the program's activities and achievements at the local level.NEWwill use the same strategic approach. Analysis of mediaresourcesavailableinAfghanistan 24. National media are concentrated in Kabul, with radio and print agencies in all provinces. Television has a strong broadcast presence in most urban centers. National private radio and television agencies may air NRAF' products for free if they are professionally produced, are consistently provided and are o f current interest to the agencies. Radio and Television Afghanistan (RTA) which i s government-owned will provide free access to NRAP projects because NRAP i s part o f the government. The presence o f foreign media in Kabul i s steadily declining; however, they are increasingly hiring local Afghan journalists to feed news to their agencies. Press Contacts Newspapers (English):Afghanistan Times, Kabul Times Magazines (English): Afghan Scene Magazine published by Moby Capital Partners. Newspapers (DariPushtu): Anis Daily, EslahDaily, Hewad Daily. Radio stations: Radio Afghanistan, Radio Kilid, Azadi Radio, Voice o f America, BBC, Good Morning & Good Evening Afghanistan Radio, Radio Voice o f Freedom, And several free local radio stations Television stations: RTA, Tolo TV, Lemar TV, Aina TV, Anana TV, Afghan TV, Shamshad TV, and several local television stations ISAF Radio & Television spots 25. NRAP has held meetings with ISAF TV Producers and has established a working relationship with ISAF for Television broadcasts. TV Journalists from ISAF have visited rural road sites in Kabul and Logar and have produced TV segments for distribution throughout Afghanistan. NR4P has also had meetings with ISAFRadio Group Institutionalarrangements 26. A Public Communication Unit (PCU) will be established in each o f the two project's PIUS, one for MRRD and one for MPW, this arrangement will allow for differentiation o f communication programs for secondary and tertiary roads. The two PCUs will work closely together and receive support from the communications units o f the two line ministries o f MRRD and MPW. The ministries have established respective offices o f communications and these offices conduct regular meetings to share information. 121 27. The project's PCUs will work with other ministries to ensure good synergy. For communication purposes, cooperation will be established with the e.g. the ministries o f Agriculture, Energy and Water, Interior, Counter Narcotics, Defense, Women Affairs, and Martyrs & Disable. Each subcomponent, including pertinent activities, will be managed by a communication specialist for the sector. Coordination 28. Communication activities should not take place in isolation and must be coordinated with other MRRD and MPW communications departments' programs, government communication priorities, and with the international community. Communication about one government program should not seem to be in competition with other government programs. The NEW benefits from a well developed production capability under NR4P and the ministries that can be used to the benefit the project as a whole, as long as responsibility and management i s raised to the program's levels and the communication units are sufficiently staffed and resourced. 29. Public and internal communication to diverse audiences with different languages i s complex and staff should be chosen with care. To ensure that the public receives accurate, current information, communicators must have up-to-date information about projects, activities and issues. The senior communication representative should be part o f the managementteam. Evaluation 30. It i s the responsibility o f the communicator to ensure the audience receives and understands what i s being communicated. Evaluation should include whether or not the activity reaches the intendedaudience and ifthe informationprovidedby different activities i s consistent. The degree o f success o f communications can be measured in part by media monitoring analysis, and by formal and informal surveys. Websites and newsletters should invite feedback, and any meeting or conference can be a venue to ask the participants what they know o f the communications activities and what they think about their impact. 122 Appendix 11:EnvironmentalandSocial ManagementFramework ISLAMIC REPUBLICOFAFGHANISTAN Ministryof RuralRehabilitationand Development(MRRD) And Ministryof PublicWorks (MPW) NationalRuralAccess Program(NRAP) ExecutiveSummary Environmentaland Social ManagementFramework (ESMF) NATIONALEMERGENCY RURALACCESSPROJECT(NERAP) July 2007 123 I. BackgroundandtheproposedNERAP: 1. The Government of Afghanistan (GOA) attaches a high priority to improving rural accessibility and has beenpromoting the reconstruction o f rural access infrastructure since 2002. Onginally known as the National Emergency Employment Program (NEEP) this effort was part o f the Government's social protection agenda and aimed to create employment while also rehabilitating rural roads. In 2005 an external review recommended to shift the emphasis to the provision o f quality rural roads while creating jobs when feasible. GOA accepted this recommendation and the program i s now known as the National Emergency Rural Access Program(NRAP)which i s being supported by IDA and several donors under the leadershp o fthe World Bank. 2. The NRAP i s executed jointly by the Ministry o f Rural Rehabilitation and Development (MRRD) and the Ministry of Public Works (MPW) with implementation support provided by United Nations Office o f Project Services (UNOPS) and has been ongoing since mid 2002. From inception and until the end o f 2004 the programme was known as the national emergency employment programme (NEEP). In 2005 the focus broadened from that o f a primarily employment generation programme to support local sustainable development through improvements inrural access infrastructure. Hence in2005 the programme name was changed to the national rural access programme (NRAP). 3. Since its inception in2002 under the Emergency Community Empowerment Project, NRAP has rehabilitated about 9,000 km o f rural roads throughout the country to an all-weather standard and has connected 3,000 villages. The rural road network i s estimated at 30,000 km and the works, to-date, have returned more than 25% o f the network to maintainable condition. The program also provided around 13 million labor-days o f employment. The program i s working in all provinces and i s adapting its operations to adjust to the difficult security situation. To reach the target o f the Compact, an additional 4,000 kmo f rural roads need to be rehabilitated over the next three years and included in the maintainable network, resulting in an annual rehabilitation target o f 1,350 km. 4. Based on the request from the GOA,WB/IDA together with the Government i s preparing a new project o f US$137 million. The objective o f the proposed National Emergency Rural Access Project (NERAP) is to provide year-round access to basic services and facilities in rural areas o f Afghanistan covered by the project. This will be achieved through a private-sector led development and maintenance o f rural access infrastructure. The achievement o f PDO will contribute to enhance well-being and promote equitable economic growth in the country. The PDOis derived from the overarching programobjective o fNERAP. 5. The NationalEmergencyRuralaccess Project and Program (NERAP) aims to enhance human security and promote equitable economic growth by ensuring year round access to basic services and facilities in rural Afghanistan by promoting local productive capacity, through a private sector led development o f physical rural access infrastructure and employment creation for the poor. In doing so NERAF' seeks to rehabilitate, reconstruct and maintain essential rural access infrastructure using appropriate labor based approaches thereby creating short term employment opportunities for the rural poor, nation-wide. 124 6. The proposedproject components are: Component A. Improvement of secondary roads (US$78.2 million equivalent including contingencies and taxes of which IDA will jinanceUS$53.2 million equivalent), including rehabilitation and reconstruction o f some 1050 kilometers o f secondary rural roads; emergency repair works to roads and bridges following natural disasters such as heavy snow, rocks falls, landslide and rocks blockage, heavy rains and flooding; activities to implement and monitor the updated Environmental and Social Management Framework (ESMF); and the services o f an implementation consultant and financial contribution to incremental operating expenses required to runthe project implementation unito fMPW. Component B. Improvement of tertiary roads (US$52.I million equivalent including contingencies and taxes of which IDA will$nanceUS$52. I million equivalent), rehabilitation and reconstruction o f some 925 kilometers o f tertiary rural roads; emergency repair works to roads and bridges following natural disasters such as heavy snow, rocks falls, landslide and rocks blockage, heavy rains and flooding; routine maintenance o f the previously rehabilitated rural roads; activities to implement and monitor the updated Environmental and Social Management Framework (ESMF) and Social Inclusion activities; and the services o f an implementation consultant and financial contributionto incremental operating expensesrequiredto runthe project implementation unito f MRRD. Component C. Institutional strengthening, capacity building and project implementation assistance (US$6.7 million equivalent including contingencies and taxes of which IDA will financeUS$6.7 million equivalent) including the setting up o f a rural roads management system ( mostly consisting in the formulation o f a rural access strategy and its implementation and the setting up and implementation o f maintenance mechanism, maintenance programming for the short and medium term). In addition and in conformity with the road management strategy, this includes also capacity building activities for staff who will be tasked to manage the rural road sector and project management, monitoring and evaluation activities. 11. Objectives 7. This Environmental and Social Safeguards Frameworkprovides general policies, guidelines, codes o f practice and procedures to be integrated into the implementation o f the proposed World Bank supported National Emergency Rural Access Project (NEW).Consistent with existing national legislation, the objective o f this Framework i s to help ensure that activities under the proposedreconstruction operation will: 0 Protect human health; 0 Prevent or compensate any loss o f livelihood; e Prevent environmental degradation as a result o f either individual road or their cumulative effects; e Enhance positive environmental and social outcomes; and, 0 Ensure compliance with World Bank safeguard policies. 8. The ESMF comprises the following safeguard instruments: (i) Inclusion Framework Social (SIF), and (ii) Environmental Mitigation Measures (EMM)/Environmental Management Plan the (EMP). 125 111. Guidingprinciples,Policy,Legal andAdministrativeFramework 9. No significant environmental impacts are anticipated as the works proposed only involve repair and rehabilitation o f existingrural roads and related access infrastructure. The project i s not expected to have any land acquisition or other adverse social impacts, but on the contrary significant positive social impacts regarding improved livelihoods. The project i s national in scope with a focus on vulnerable districts, and this will enable different ethnic groups to benefit from the project. Since the project involves repair and rehabilitation o f existing roads, it will not impact historical or cultural artifacts. The project implementation manual will include project screening, planning and appraisal formats, which will record the environmental and social impacts and related mitigation measures for specific roads. Monitoring will include reporting on chance archeological finds. The project implementation manual will be based on the Environmental and Social Safeguards Framework agreed between the Government and the Bank. 10. Environmental Impact Assessment regulations promulgated by National Environmental Protection Agency (NEPA): As per the EIA regulation o f NEPA, the transport projects are categorized as "A" and "B" activities depending on following features o f the transport project: (i) Activity A: National or provincial highways or major roads with a total cost o f US$800,000 dollars, or more with the exception o f maintenance, rebuildingor reconstruction o f existingroads; (ii) Activity B : The construction or upgrading o f national or provincial highways and roads (except maintenance, rebuilding or reconstruction o f existing roads with a total cost o f less than US$800,000 dollars. However, there are another two categories o f activities to which provisions o f EL4regulations o f NEPA are applicable, NEWroad works may fall inthese categories: (iii) Activity creating adverse impact on Environmentally Sensitive Areas which relates to activities likely to have significant adverse impact on the environment of the area that has been determined by NEPAto be an environmentally sensitive area; (iv) ProhibitedActivity: any other activity that i s likely to have a significant adverse effect on the environment and which is determined by NEPA to be a prohibited activity. For above mentioned category o f projects, project component will have to take "certificate o f compliance" from NEPA after malung application and fulfilling the statutory requirements o fNEPA. 11. Applicability to the N E W project. It is important to note that the most o f the road works constituting the NERAP programare repair or rehabilitationo f village, district and provinceroads type and do not belong to constructiodupgrading o f national, provincial or major road category and hence NEPA's requirement o f "certificate o f compliance" i s not required. Therefore, all road works are exempted from the requirement o f "certificate o f Compliance" from NEPA. However, where there i s possibility for new construction o f district roads and provincial roads, and/or rehabilitation o f roads in environmentally sensitive areas as may be defined by the authority in future, NEPAprovisions relatedto EIAregulationwill be applicable. 12. Land acquisition and resettlement. The activities to be undertaken under the proposed project involve rehabilitation o f existing secondary and tertiary roads that are not likelyto involve any land acquisition or have any other adverse social impacts. No involuntary resettlement i s anticipated. However, land acquisition, wherever required for subproject activities o f NERAP program will be under taken as per the provisions o f Afghanistan's current Expropriation Land Law, enacted in 2000. The process will be further amended to meet the requirement of the Land Policy 2007 in Afghanistan which has been placed before cabinet and National Assembly for approval. 126 13. World Bank Safeguard Policies which could be triggered: The relevant safeguards for this project are mostly Environmental Assessment (OP4.01), Involuntary Resettlement (OP/BP4.12), Indigenous Peoples (OP/BP 4.20), Natural Habitats (OP/BP 4.04) and Physical Cultural Resources (OP/BP 4.11). For all five safeguard policies, the project design follows the criteria and norms laid down inthe "Revised Guidance Note on Application o f Safeguard Policies for the Afghanistan Program". Because individual subproject investments are not all known in advance, GOAwill adopt aprogrammatic approach, with the following characteristics: TI,le 1: WorldBankSafeguardPoli ies applicable S. World Bank Applicabledueto Addressedby ESMF N. Policv 1 Village road projects are likely to have impacts on environmental Implementation o f and social components as on water 1 Environmental Mitigation Environmental bodies, existing slopes incase o f MeasuredEnvironmental 1. Assessment mountainous and hilly areas and on management Plan (EMP) OP 4.01 trees along the road 1 Social InclusionFramework (SIF) to address the environmental and social issues Involuntary 1 Preparationo f SIF to address Resettlement social impacts through enhanced OP4.12 community participation and 1 Project involves affect on assets and livelihood, impact onpeople providing options to mitigate losses belonging to ethnic andreligious community. Religious/ethnic 1 Provisions to ensure that all groups and projects have equity across groups constituti Project involves impact on people religious/ethnic groups and inclusion ngminorities at belonging to ethnic, religious and o f groups constituting minorities at local level minority community. local level Preparationand Implementation o f EMP. Natural Habitats 1 Project entails a few alignment OP 4.04 through natural water bodies 1 The project entails risk / damage 1 Provisions made for relocation Physical Cultural to cultural properties and has o f cultural properties and protection Resources likelihood o f finding archeological o f the same under the "Law on OP4.11 properties Preservation o f Afghanistan's Historicaland Cultural Heritage (2004)". 14. Mine Risk Management.-Road works will not be implemented without appropriate mine-risk management. Current practice (evolved during field implementation) for managing mine risk have been robust. A GOAprocedure for mine risk management (based on these practices) in 127 World Bank funded projects has been sent for approval o f the Bank Safeguards. Once approved by the Bank and signedby GOA,this will become a part o fthe project safeguard framework. All risk assessment and clearance tasks shall be implemented in coordination with the Mine Action Center for Afghanistan (MACA). These procedures may need to be amended in the future, depending on evolving circumstances. IV. Environmental and SocialManagement Framework (ESMF) 15. Environmental and social safeguard measures.Options to address the various environmental and social issues identified have been worked out based on review o f good practices and requirement o f compliance with the legal provisions. The analysis o f options enabled the identification o f measures to address the environmental and social issues. The measures have been finalized through stakeholder consultations, wherein inputs from the stakeholders including the executing agencies, line agencies and National Environment Protection Agency (NEPA) enabled the finalization o f the suitable measures. The measures envisaged under the ESMF are implementedby the bothministries o fMRRDandMPW. 16. Screening of proposed road works. A screening and review process for identification o f sensitive roads with respect to environmental/social issues has been worked out. The screening exercise will be carried out by the PIUs prior to initiation o f the project preparation activities. The screening exercise will be used as a tool to identify the severity o f impacts o f environmental and social issues, and thereby integrate their mitigation measures into the project preparation accordingly. 17. The screening criteria include: Environmental factors such as; Sensitive areas, natural habitats, other state declared sensitive areas Felling o f trees Clearance o f vegetative cover Loss o fproductive apcultural land Cuts acrossperennial streams or surface water bodies Vulnerability to natural hazards, land slideshlips, soil erosion and, Environmental features as wet lands, protected ground water zone, etc Social factors such as; Landavailability Loss o f structures Loss o f livelihood Impacts on common property resources 18. The screening shall provide information on *Categories o froad works and inclusioninthe project *Categories ofroad works to be excluded in sensitive areas through exclusion criteria. 19. Responsibilitiesfor Safeguard Screening and Mitigation. The two ministries will act as the implementing agencies for the proposed project, the Ministry o f Reconstruction and Rural Development and the Ministry o f Public Works. Each Ministry will be responsible for applying the safeguard screening and mitigation requirements to its own road works. Within each Ministry, a Safeguards Focal Point will be identified with responsibility for overseeing the implementation o f the Environmental and Social Safeguards Framework. The National Coordination Unit(NCU) being supported under this project will ensure third-party trachng o f implementation o f the Framework. 128 Environment: 20. Low Impact road works (L):The environmental impacts will be o f the type normally associated with standard rural road rehabilitation/ reconstruction. Where the expected impacts are small in scale, and can be mitigated through standard measures suggested in the Environmental MitigationMeasures (EMMs). 21. MediumImpact roadworks (M):Where impacts are larger and complex than Category `L' projects requiring specific intervention, such as new construction projects, project idadjacent to areas that are declared environmentally sensitive areas by NEPA or that have sensitive environmental features like passing through natural water bodies, flood prone areas, etc. there by requiring additional analysis and site specific environmental management plans. In such cases EMP will be prepared as part o f Project Document (PD). The following aspects will be considered as triggers for the Mediumimpact road works thereby requiringpreparation o f EMP, a. Impacts on natural habitats, b. Vulnerability to naturalhazards, land slides/slips c. Projects adjacent to(within 500 m) the environmentally sensitive area as declared by NEPA or areas as detailed out inexclusion list for this ESMF, and d. Projects inflood prone areas. 22. In addition to the preparation o f the EMP for such projects, the PILT will undertake the particular road improvement in compliance with the statutory provisions for Environmental compliance by NEPA. Social: 23. .. Low Impact roadworks (L): Trigger: The extent o f the requirement for land width accretion is not significant and there i s no or negligibleimpact on structures or loss o f livelihood. Any extra land taken in such roads for the proposed improvements will be through community planning enabling a transparent process o f land transfer and alignment finalization as laid down in the Social Inclusion Framework (SIF). This will involve community and village level government body (ShurdCDC) participation in finalizing the land requirement and alignment finalization giving due consideration to aspect o f land, safety and scope for future development along the project RoadAlignment. 24. .. MediumImpact roadworks (M): Triggers: Roads, wherein there i s a potential for reasonable loss o f landassets and common properties. Prior to initiation o f the project preparation activities o f such subproject, PIU through . community involvement will prepare R&R plan and land transfer process, which should be acceptable to the affected people. However if it found that there i s a resentment o f the communities towards the process o f land transfer and R&R plan for the project. In such cases, the PIU through community planning will work out alternative alignments, design modifications to address social issues also tahng into account aspects such as road safety and scope for future development. 129 Road works where no scope exists for addressing the resettlement impacts through any o f the mechanisms suggested inthe SIF will be called as Highimpactproject not to be taken upduringthat particular year andputinexclusionlist. For such roads, the PIU will decide not to go forward with the proposed road improvement through a written communication to the ShurdCDC stating the reasons, and no further analysis or investigation will be undertaken. Such roads will be taken up in subsequent phases o f the project, only after these issues are resolved by the communities /Shura/ CDC and there i s a formal demand for the project to the PIUfkom the Shura/CDC as per the NEW guidelines. 25. Exclusion of roads. The exclusion criteria have been worked out to identify activities that would result in serious environmentalhocial impacts and hence will not be considered for the NEWproject.Suchroadworksshallinclude: 9 Roadworks involvingsignificant conversion or degradation ofcriticalnaturalhabitats. Including, but not limited to, any activity within: 0 Ab-i-Estada Waterfowl Sanctuary; 0 Ajar Valley (Proposed) Wildlife Reserve; 0 Dashte-Nawar Waterfowl Sanctuary; 0 Pamir-Buzurg (Proposed) Wildlife Sanctuary; 0 Bande Amir National Park; 0 Kole Hashmat Khan (Proposed) Waterfowl Sanctuary 9 Roadpassingthroughdesignatedprotectedareas, asReservedforests, Protectedforest 9 Project will significantly damage non-replicable cultural property, includingbutnot limitedto any activities that affect the following sites: 0 monuments o f Herat (including the Friday Mosque, ceramic tile workshop, Musallah complex, Fifth Minaret, Gawhar Shah mausoleum, mausoleum o f Ali Sher Navaii, and the Shah Zadehah mausoleumcomplex); 0 monuments o f Bamiyan Valley (including Fuladi, Kakrak, Shar-I Ghulghular and Shahr-i Zuhak); 0 archaeological site o f Ai Khanum; 0 site and monuments o f Ghami; 0 minaret o f Jam; 0 mosque o fHaji PiyadaNuGunbad, Balkhprovince; 0 stupa and monastery o f Guldarra; 0 site and monuments o f Lashkar-i Bazar, Bost; 0 archaeological site o f Surkh Kotal. 9 Projectrequires involuntaryacquisition ofland, or the resettlement or compensation ofmore than 200 people. 9 Roadstypes other than"province to district/district/village roads" 26. Environmental Mitigation Measures (EMMs). The summary o f the environmental mitigation measures (EMMs) as described above are presented intable below, and will guide the environmental mitigation measures to be implemented by project engineers with support from the project implementation unit (PIU), contractors, and other parties concerned with mitigating possible environmental impacts o f the roadworks. 130 Table2: Environmental MitigationMeasures (EMM)and their coverage ProjectPreparation (Planning & Design) Slope Stability and ErosionControl Water Bodies PublicandWorker's Health & Safety Tree Plantation 131 27. The Social Inclusion Framework (SIF) recommends resettlement and participation framework for NEW Project. 28. Resettlement Framework. The Resettlement Framework outlines the principles and approaches to be followed in addressing and mitigating the social impacts due to the project. The regional PIU, in co-ordination with the Shura/CDC at the village level and project engineer of respective subproject will be responsible for the planning and implementation o f resettlement framework addressing social issues. The principles adopted for addressing the social issues including land requirement in the project will be guided by the existing traditional approach followed by the community. Traditionally, communities o f Afghanistan have been living as closely knit unit and decisions o f community heads are treated as final. Resettlement issue shall be facilitated by the regonal PIU through project engineer and regional S I 0 but with consent o f the community heads. The most important issue will be documentation of these proceedings to avoid any communication gap in future. The resettlement planning involves the following tasks and subtasks: Task 1: Selectionof Roads,for wideninglrehabilitatiord newconstruction Dissemination of Project Information,after selection o f roads and prior to finalisation o f the alignment through Transect Walk; Finalisation of alignment through communityplanninginvolvingthe local communities and provincial departments duringTransect Walk Consultations; Consultationwith affectedpersons,to communicate how concerns ofthe communities have / have not been incorporated into the project design through disclosure of outputs o fTransect Walk; Integrating R&R issues in project document, ensuring that the designs for the N E W roads are sensitive to social issues and have incorporated the social considerations; Task 2: ' . Disclosure of process of land requirement and entitlement provisions, to provide information to PAPS. Serving Advance Notice, for removal o f encroachments and clearance o f assets or standing crops; Entering M o U with Ministry by IndividuaVGroup Landowners, to be coordinated by Regional PIU, which will submit a copy each to provincial governor and PIU at Kabul. This will ensure documented record o f land donated or transferred to the ministry against certain compensation. In case o f Projects where individual PAP s are not significant in terms o f numbers and size o f the land/asset loss, group MoU between particular Shura /CDC and . Ministrycan be signed. Insuch case, MoUpaper shall contain name and signature of all the persons whose landasset will be transferred to the ministryvoluntarily. Information Disclosure and Consultations before construction: The community representative/contractor, as the case may be, shall, prior to mobilization of work, provide details o f temporary impacts during construction such as disruption on existing pathway, increased pollution levels, possible damages to adjacent land due to movement of machinery and project completion date so that community i s well aware o f the project issues. Similar provision shall be made for separate consultation with women o f the community. 132 29. Impacts and Entitlements. The resettlement framework for addressing various social impacts created by the project is summarized and presented inthe Table below: Table3: Impactand ProposedMeasures Land 1 Willingly transfer landby means o f MoUto the ministry ,or 1 Assistance/Support by the community for vulnerable PAPS through: (i) alternate land sites provided by community/CDC/Shura (ii) monetary compensation by the ministry Structures 1 Willingly transfer assets bymeans o fMoUto the ministry, or 1 Assistance/support for asset creation by community and CDC/Shura or monetary compensation by the ministry Common Property 1 Relocationby Shura/community/CDC with technical inputs from PIU, or Resources 1 I Reconstruction o f asset by Shura/community/CDC with technical inputs f r o r n ~ I U CustomaryRight HoldersDnformalSettlements Land 1 Verification o f land claimby majority vote o f CDC/Shura 1 Willingly transfer landbymeans o fMoUto the ministry, or 1 Assistance/Support by the community for vulnerable PAPS through: (i) alternate land sites provided by community/CDC/Shura or (ii)monetary compensation by the ministry Structures 1 Willingly transfer assets bymeans o fMoU, or 1 Assistance/support for asset creation by community and CDC/Shura or monetary compensation by the ministry 30. Monitoring and Audit of Social Inclusion. The Social Inclusion Unit (SI0 officers), regional monitoring officer and concerned CDC/Shura will be responsible for supervision o f Resettlement and Rehabilitation (R&R) implementation and its progress. Safeguard specialist o f the World Bank will undertake thirdpart audit to verify the sanctity o f the process being followed as per the provisions of SIF. The regional SIOMonitoring officer inrespective regional PIUwill document the progress o f implementation and send to PIU at Kabul on monthly basis. PIU at Kabulwill document progress report and forward the same to MRRDMPW. 3 1. Grievance Redressal Mechanism. A village level Gnevance Committee will be set up in consultation with seniors o f the community for resolving issues. Facilitated by regional S I 0 this committee will meet once ina monthuntilimplementation o f SIF i s completed and quarterly after initiation o f the construction work for addressing grievances untilthe construction i s completed. Members of CDC/Shura will not be eligible to join grievance redressal committee. All decisions will be taken on the basis o f majority vote o f the committee. Residual grievances will be addressed through a Grievance Redressal Committee at the province level, comprising o f Regional SIO, Provincial Governor, and Head o f concerned ShurdCDC. Representative o f PAPS will be invitedto bepresent duringthe proceedings o fgnevanceredressal. 32. Capacity Building and Monitoring Of Safeguard Framework Implementation. As part o f the capacity building that will be provided for implementation o f the proposed project, the Safeguards Focal Points and relevant staff o f the concerned Ministries will also receive training in 133 the application o f the Safeguard Framework and specifically during the development and implementation o f the road works. To assist inthis capacity building, and to provide subsequent guidance and review o f the application o f the Framework, GOAwill contract regularly specialist social and environmental services, and as part o f its overall project implementation consultant's team. Duringsupervision o f these operations, the World Bank will assess the implementation o f the Framework, and ifrequiredwill recommend additional strengthening. 33. Consultation and Disclosure. This Environmental and Social Safeguards Framework reflects consultations with the principal NGOs and development partners participating in reconstruction activities in Afghanistan. It has been disclosed prior to appraisal by GOAinboth Dari and Pushtu, as well as English, and it was made available at the World Bank's Infoshop. Since no other separate environmental or social assessments will be prepared for activities under the proposedproject, no additional disclosure requirements will apply. Inthis regard, however, it i s worth noting that GOAintends to make all project documentation publicly available through the Afghan Information Management System (AIMS) and on the websites o f the ministries and the NCU. 134 Format 1:PublicAnnouncements (Prior to finalization of alignment/transect Walk) Province: ................. Project ID:........................ District/Village: .................. What is the Project andits salient features Benefits Which Agencies are involved What if resentment from community Needfor additional landthroughVoluntary LandDonation Likely Impacts andEntitlements Date of Transect Walk AlignmentDetails alongwith mapof alignment displayed Contact Person and Address (PIU andPRI) Responsible Agency/Person: PIU (PEIRSIO), CDC/Shura (Head andother members) 135 Format 2: Alignment Details for Disclosure (Prior to finalization of alignment/transect walk) Province: ................. Project ID:........................ District/Village: .................. Province: District: Village: Name of Project alignment: Total Length (km): Connected Settlements: *Starting Node/km: EndingNode/ km: Population Benefited Total: Implementing Agency: Name of Contact Personand Address: Project alignment marked on schematic diagram with centerline & socio-environmental features: Socio-environmental Features Schematic diagram 136 Format-3 MemorandumofUnderstanding(MoU) for Individuals The following agreement has beenmade on............................ day o f............................. between............................................... resident o f .......................................... ..,(the Owner) And ...................................................... .,(the Recipient). 1.That the Ownerholdsthe transferable right of ............................................ .jenbo f . . landstructure/asset in.................................................................................... 2. That the Owner testifies that the landstructureis free o f squatters or encroachers andnot subject to other claims. 3. That the Owner hereby grants to the Recipient this asset for the construction and development o f ................................ for the benefit o f the villagers and the public at large. (Either, in case of donation:) 4. That the Owner will not claim any compensation against the grant o fthis asset. (Or, in case of compensation:) 4. That the Owner will receive compensationagainst the grant o fthis asset as per the attached Schedule. 5. That the Recipient agrees to accept this grant o f asset for the purposes mentioned. 6. That the Recipient shall construct and develop the.. ..................... .and take all possible precautionsto avoid damage to adjacent landstructure/other assets. 7. That boththe parties agree that the.. ........................ .so constructeddeveloped shall be public premises. 8. That the provisions o fthis agreement will come into force from the date o f signingo f this MoU. Signature o f the Owner: Signature o fthe MRRDWW Officer (Recipient): Witnesses: (Signature, name and address) 137 Format 4 MemorandumofUnderstanding(Mow for Group of CommunityMembers The following agreement has beenmade on ............................ day o f............................. between community members through ShurdCDC o f ............................................. the Village/District) And ................................................... ....(the Recipient).Name ofthe community members are listedbelow. 1.That the Owners hereby grant to the Recipient this asset for the construction and development o f ................................ for the benefit o f the villagers andthe public at large. 2. That the Ownerswill not claim any compensation against the grant o f this asset. 3. That the Recipient shall construct and develop the.. ..................... .andtake all possible precautions to avoid damage to adjacent land/structure/other assets. 4. That both the parties agree that the.. ........................ .so constructeddeveloped shall be public premises. 8. That the provisions o fthis agreement will come into force from the date o f signing o f this MoU. DetailsofCommunitvmembersdonatingvoluntary: S.N. Nameof CommunityMember Land/asset details Signature Signature o f the Shura/CDC Head: Signature o fthe MRRD/MPWOfficer (Recipient) : Witnesses: 1. 1 (Signature, name and address) 138 Appendix 12: CommunitybasedcontractsandSocial inclusionactivities 1. After a review of the initial project experience and the reorientation o f the program from employment generation to rural access the National Emergency Rural Access Project (NEW) will work towards empowering rural communities through the creation o f year-round rural access, as accessibility in itself i s not desirable but for the benefits it brings to the poor. Communities will be involved in the project through community based contracts and for routine maintenance o f works. Similarly a key criteria for fund allocation for both secondary and tertiary roads will be the direct community requests channeled through the planning department o f MPW and MRRDand other administrative instances. 2. When community contracts are awarded (i) the Community Development Councils (CDC) will be the entry point for community contracting for routine maintenance works and tertiary road consbmtion where unslulledlabor i s required and at least one CDC member will be appointed to manage payments and monitor the sub-project. Where a CDC does not exist a select number of community members will be organizedelected to manage the contracts and labor selection); (ii) adopt productivity norms for wage payments and apply market rates for unshlled labor; (iii) engage the CDC or community to identify and prioritize the poorest households to engage inthis work; (iv) ensure a transparent and systematic methodology i s applied to sub-project selection and implementation;; and (v) CDCs will engage with the NRAP and/or NSP staff in monitoring o f activities. 3. The World Bank will routinely supervise and report on the community based contracting modalities, participatory processes, and key issues arising from this form o f contracting and ensure that CDCs/community members are developing a good understanding o f managing funds provided under this project for maintenance purposes. Community Based Contractingthrough CDCs 4. InNovember2006, the President signed the CDC by-law which establishedthe CDC as the social and development foundation at the community level, responsible for the implementation and supervision o f development projects and linkage between the community, government and non-government organizations. Inline with this NRAP will target and implement these contracts through the locally elected CDCs wherever they have been established. This will contribute to strengthening local ownership and the capacity o f the CDC through participation in the creation o frural access. 5. Further to Government's commitment to facilitate CDC participation in development projects, NEWwill explore the possibility to use the fiduciary and implementationmechanisms that have been established by the National Solidarity Program (NSP) for Level 1 contracts. As this will be a new approach to the financial management of Level 1contracts and staff (such as the communitydevelopment and social inclusionofficers) engaged inNRAP implementation will need to build their capacity to ensure correct application o f transparent and accountable processes. This should be considered an integral part o f the program's transition from IP to towards government ownership. 6. While the transition from the current financial and administration systems under NEEPRA i s takmg place under NRAP the staff will explore and field-test the new systems through the more established CDCs they are already engaged with. 139 Capacity building 7. Communities will require training periodically on managing contracts, budgets, record keeping and on technical needs for road construction and maintenance. This would best be provided by the facilitating partners that are workmg with NSP as they have a past record in doing so. 8. Routine training should also be provided to the community development specialists/social inclusion officers who should be pro-active in suggesting specific training requirements and in acquiring funds from other sources for this purpose. Productivity norms, wage rates andpayment 9. Productivity-based wages that were established successfully under NEEPRA will continue under NERAP as they have now come to be accepted among the project beneficiaries, after some teething problems. Procurement and disbursement procedures should ensure that payments are made on time and wherever possible advance payments should be provided to communities. Under no circumstance should the payment procedures hold back funds or allow a community member to go into debt because o f the time they have spent beingemployed under this project. 10. Initially under NEEP low but flat-wage rates were used to make the program self-targeting. However this did not attract the intended unslulled beneficiaries due to seasonal and regional variations in market wages and varying labor supply. Instead NEEP activities in most regions attracted able-bodied males and could be implemented only in non-winter months, as they competed with existing job opportunities such as in construction, agriculture, and poppy cultivation. Additionally, the flat wage rate originally used did not reflect the different productivity levels o f individual workers. 11. The procedure for fundingo f community-based contracts shouldbe decentralized so that the potential for delays in payments such as those experienced previously in the program will be substantially reduced. Furthermore the I C should provide advance payments directly to communities in-order to prevent any problems with slow payment, fund transfers or the laborer having to borrow money even though he/she i s employed under the program. Pro-poor labor selection (targetedpopulation) 12. Targeting the poorest households in the selection o f workers has proven to be a good practice. Where the project contracts communities, local market wage rates will be applied in joint collaboration with the CDC and the poorest households as identified through participatory wealth rankings will be targeted. Going forward advance payments can be made and the CDC will beresponsible for managing and disbursing these funds according to workers outputs. 13. A trend that was initiated under NEEP-1and NEEPRA and carried forward to NRAP i s the use o f wealth ranlungs that identify the poor within a village for work on the selected roads. The wealth rankings are produced by communities, reflecting their perceptions o f poverty. This practice draws on participatory rural appraisal techniques, promotes ownership and transparency inrecruitment andis inline withthe current practices ofthe mobilizedCDCs. 140 14. In meeting the project objectives to provide year-round access to basic services, communities will also be contracted on a performance basis, for maintenance and snow clearing activities under a similar participatory process that targets the poorest households. Engaging communitiesin all stages of sub-project planning and implementation 15. In order to leverage on local knowledge and generate ownership o f all works conducted under the program, engineers and social mobilization officers will inform and involve communities throughout the project cycle for L1 & L 2 contracts. Where private contractors are involved a meeting with the CDC and/or communities living around the project site will be arranged prior to the start o f the works. 16. Lessons from project implementation have demonstrated that increased participation o f social inclusion officers and local communities in all stages o f the program cycle regardless o f whether they will be employed for this work (for L1 & L 2 contracts) can optimize delivery, reduce unnecessary delays inthe implementation o f contracts and conflicts between communities and contractors, and reduce design flaws through incorporating local knowledge. This will also be a key element o fthe ESMF. 17. Communities would play an essential role to give advice on the security situation in their area. In the less secure areas, the ministries and the Implementation Consultant would use security intelligence to gauge the situation but often project and contractor staff would be dependent on the advice o f the communities. It i s therefore vital that the communities are as engaged and supportive as possible o f the roadrehabilitation. Monitoringfor community-basedcontracts 18. Social Inclusion officers from MRRD and IC will develop indicators and a monitoring plan incollaboration with the CDCs to supervise all phases of the community based contracts and to ensure that maintenance funds are spent appropriately. 19. Locally hired community mobilizers will be put in place (or the same people workmg on NSP will be used) to provide routine monitoring o f labor selection processes, execution o f community grants, labor attendance and all other activities that the communities will be engaged through this project on behalf o f the regional social inclusion officers. Similarly grievances will be monitored routinely to reduce conflicts and potential delays in payments and project implementation due to adverse environmental and social impacts. In the less secure areas community-based contracting will also be monitoredby communities. Communitybasedmaintenanceof ruralaccess 20. To ensure that benefits and investments inthis sector are sustained, communities will also be engaged to a select number o f routine maintenance o f works. Experience in Afghanistan has shown that communities are capable and willing to perform routine maintenance o f both tertiary and secondary roads and infrastructure (such as drainage systems, culverts) as they see this as an endeavor towards maintaininga vital asset both socially and economically. 21. Investments in the rural roads and all-year access will be mainstreamed into project design, through a routine maintenance program carried out mainly for the already rehabilitated roads under NEEPNRAP financed under IDA. A maintenance strategy will be developed jointly by MRRDandMPWwhich will incorporatefindingsfromtheruralmaintenance pilot study. 141 22. MRRD will work in collaboration with the National Solidarity Program(NSP) to develop a joint mechanism using the Facilitating Partners (FP) to provide technical advice and use the CDCs as the entry point for community contracting for routine maintenance and winterization as well as engage the poorest households identifiedby the CDC or communities. 23. The maintenance activities carried out by communities will also provide year-round employment to some community members while generating year long and sustainable rural access benefits to the rural poor. In the winter o f 2005/6, the NRAP Program Development & CoordinationUnit (PDCU) allocated funds" to carry out emergency snow clearance activities in highly affected rural areas. These resources were channeled to the NRAP regional offices to enable the Provincial authorities to respond to the emergency snow clearing situations. The standard operating procedures developed for this will be reviewed and adopted to award winterization contracts to communities and facilitate the disbursement o f funds through NRAP or NSP regionaloffices. Fundsinthe amount ofUSD200,OOO were allocated fromthe NRAPbudget. 142 Appendix 13: PoppyCultivation Afghanistan: National EmergencyRuralAccess Programme (NERAP) Treating the OpiumProblem12 A. StrategicApproach The opiumproblem Reducing opium production is one o f the greatest challenges facing Afghanistan. Opium is central to the macroeconomy, contributing one third o f GDP and significant support for aggregate demand and the balance o f payments. In the rural economy, opium is a key livelihoods coping strategy for a quarter o f a million farm families, most o f them poor. In security, opium is fuelling warlordism and terrorism, and ingovernance the illegal economy is capturing or undermining state building efforts at all levels. Governmentstrategy Government's strategy to reduce and ultimately eliminate opium from the Afghan economy comprises essentially three elements. The first i s to improve governance and the rule of law, strengthening public institutions and mechanisms to control drugs, together with the development ofresponsible governance structures and "social contract" at all levels from the community up. The second i s to raise the general level of economic activity and services, improving living standards and providing social protection. The third is to emphasize in development programs speciJic components that can have a signiJicant impact onfarmer behavior, with a focus on poorer farmers, laborers and more vulnerable areas. WorldBankapproach Withths background, the World Bank'sworking approach to the opiumproblemis : to factor considerations o f the opium problem into analysis and dialogue at all levels, including the macroeconomic dimension to support and engage in analytical work on the development dimensions o f the drug problem inAfghanistan and associated options for addressing it to help support the development elements o f Government's strategy through Bank- financed programs as appropriate to ensure that the Bank does not contribute inany way to the opium economy Screening Under this approach, the Bank proposes to screen all its activities, both operations and analytical and advisory work, to ensure that counter-narcotics aspects and potential are treated consistently and ina way that can make the maximumcontribution to the national effort. The screening process will demonstrate to what extent the operation or activity: 1. contributes to the governance agenda '*ThisAppendix was preparedby DavidMansfield, Consultant 143 2. maximizes synergies to deliver broad livellhoods impacts at the community and household level 3. maximizes more specific counter-narcotics impacts by area coverage and by addressing the poorer target groups, with components which strengthen and diversify legal livelihoods 4. identifies risks and develops an approach to ensure that Bank support "does noharm" or create risks to the Bank's reputation. 5. contains a monitoring andreporting capability that can effectively track outcomes B. Understandingthe role of opiuminlivelihoodstrategies and devising appropriate developmentresponses Reasonsfor the "success"of poppycultivationinAfghanistan InAfghanistan's current economic andpoliticalclimate there are many advantages to cultivating opiumpoppy. It is a highvalue, low weight commodity, for which there i s strong demand. There are sufficient returns at each stage of the value chain and well developed market linkages in terms of credit, purchase, transport and processing, all of which function well and flexibly, despite Afghanistan's fractured infrastructure. Traders are willing to purchase at the farm gate for cash, often in advance of the harvest. Opiumpoppy canbeproduced almost anywhere inthe country, although it grows best infree draining sandy loam soils. It is so well suited to Afghanistan's ago-climatic conditions that it produces hlgher than the global average yields o f raw opium and morphine and maximizes returns to scarce irrigation water. This latter attribute and its marketability have proven crucial to those farmers with small landholdings and large families, particularly in remote areas where cultivation is becoming increasingly concentrated. For those farmers under current conditions there is no other crop that can provide the same returns; when opium declines in those areas, the opportunities for farming income for such households will also decline, drivingpeople off the land. With these advantages - and despite law enforcement efforts - opium poppy is a relatively low risk crop inmany areas in what is generally a highrisk environment - both for farmers andtraders. The traditional credit systemknown as salaam, that provides an advance payment on an agreed amount of a future crop, has increasingly favoured opiumpoppy cultivation over other crops. In areas in which opium poppy has become entrenched, access to credit has become dependent on a farmer's willingness to cultivate opium poppy. This willingness and the possession o f the requisite skills to cultivate opium poppy have increasingly determined sharecroppers' access to land. The rental value o f land has become determined by potential opium yields rather than wheat productivity. Uneven distributionofthe considerablebenefitsof opiumproduction The economic advantages associated with cultivating opium poppy differ according to the assets farmers have at their disposal. For the relatively few large landowners opium poppy represents a highvalue crop that can accrue even greater value if it is sold after the harvest season when prices rise; as larger farmers have other income streams and liquid assets, they can achieve higher prices by selling later in the year. Moreover, landlords who make sharecropping arrangements for opium production can do even better: some inequitable sharecropping arrangements allow the landowner to take two thirds o f the final opium yield, despite contributing only 20% o f the total costs o f production. Landlords may also make 144 advance purchases o f opium at rates considerably less than the harvest price, which may generate further considerable windfall profits on the opium crop. These profits can then be reinvested in further diversifylngassets and income sources or in the opium trade itself - an ascending spiral o fwealth accumulation for the larger landowner. The position for the land poor is quite different. For this group, opium poppy is not just a source o f income. Opium poppy cultivation increases the opportunity to obtain land on a sharecropping or tenancy basis and draws on the labour supply o f the household. It provides access to both cash income from poppy and, inthe typical mixed cropping systempracticed in Afghanistan - even amongst poppy growers - the means of producing food crops for household consumption. Without opium poppy cultivation, the opportunity to access land diminishes considerably, as happened inthe province o f Nangarhar in2004105. Opiumpoppy cultivation also creates a demand for itinerant labour to assist inthe weeding and harvesting o f the crop. Based on UNODC's estimate that 193,000 hectares o f opium poppy were cultivated in the 2006107 growing season, the crop would have generated approximately 70 million days o f employment, o f which one third would have been daily wage labour opportunities. Where a household has more than one male able to follow the staggered weeding and harvesting seasons, the off-farm income generated from opium poppy can last up to five months and is typically higher than the on-farm income eamed from cultivatingthe crop as a sharecropper. Opium poppy also provides an important source o f credit for the resource poor. In areas where opium cultivation is entrenched, it defines the `creditworthiness' o f the land poor. Without it, access to basic food items, agricultural inputs and hnds for health care becomes severely constrained. Inaddition to the above direct benefits, the cultivation and trade of opium has considerable and positive multiplier effects in the rural economy. Some estimates even suggest that for every hectare o f opiumpoppy cultivated as many as 5.6 jobs are created inthe rural non-farm economy. Typology of opiumfarmers For the purposes o f the analysis inthis paper, rural households involved in opium have been classified as (1) "better off' and not dependent; ((2) less affluent and dependent; and (3) poor and highlydependent. As a general rule, Class (1) "better off' farmers have more diversified livelihood strategies. They reside in areas in close proximity to provincial or district centers, they cultivate a variety o f crops including highvalue horticulture, and they have better access to land and irrigation, and to the commodity and labour markets. They are not dependent on opium for a decent living and could be considered to be "opportunist producers", for whom application o f the law is the primary instrument of drug control. More marginal farmers (Class 2) andthe poor (Class 3, landless or with very small landholdings) are considered to be the target group for development programs that aim at contributing to the reduction o f drug production. As such, poverty reduction and opium poppy reduction strategies are closely entwined. The characteristics ofthese three classesare summarized inTable 1below. 145 Appropriate developmentresponses Opiumpoppy cultivating households are diverse and dynamic, and their decision as to how much land to dedicate to opium is influenced by a range o f different factors - notjust price. Policies and programmes that treat opium poppy farmers as homogenous will not only be ineffective, they could prove counter productive. It is necessary to work with the diversity that exists amongst opium poppy cultivators. Understanding the contribution o f the different socio-economic groups involved in opium poppy cultivation and the multiple benefits (for example social, economic and political) they subsequently derive from their involvement in its growth are critical to identifying the entry points for developing effective strategies for the sustainable elimination o f the crop inAfghanistan. DeveIopiiient programs that offer farmers real livelihoods alternatives would need to have as many characteristics as possible that "mimic" the attractions of the opium economy, particularly for smaller and poorer farmers and laborers (Classes 2 and 3) for whom choices are very limited at present. Programmes need to avoid adopting a strategy o f simply attempting to replace the relatively high level o f income from opium as derived by the 146 resource-rich (Class 1 farmers). Interventions are needed that improve the access o f smaller farmers (Class 2 and 3) to those assets to which they currently have access only through their willingness to produce opium poppy. Improving access to credit, land and off-farm and non-farm income opportunities to thepoor should be apriority. For those farmers who are not economically reliant on opium poppy cultivation (i.e. Class 1 farmers), greater emphasis should be given to applying social andlegalpressure. 147 & 0 z C .-5g 8 d . . . . . . . ... r, 0 m B Q e . . e Y 3D P d W W 0 ;a 3 eu Y C 8a 0 Y m i 0 4 L a2 -!4 Y 8 n % .. c1 2 0 . . . . . . . e e 0 z L .2C B f 4g C. Review of NER4Pfrom a counter-narcotic perspective 1. Relevantpartsofthe projectdescription The project will be implemented over three years and four fiscal years (World Bank) from January 1,2008 to December 31,2010. The estimated total cost o f the project i s US$137 million. The IDA grant allocation o f the proposed project i s US$112 million equivalent and GOA committed itself to finance the remaining US$25 million from its own resources or from donor funding. This project would finance about 20-25 percent o f the total estimated cost o fthe NRAP inthe nextfive years. The project obective i s "to enable the ruralpopulation to benefitfrom year-round access to basic services and facilities in the rural areas of Afghanistan covered by the project". This will be achieved through rehabilitation and maintenance o frural access infrastructure by contracting with the private sector and, to a lesser extent, with the communities. The achievement o f the PDO will contribute to enhancement o f well-being o f the population and promote equitable licit economic growth inthe country. ComDonent A, Improvement o f secondary roads (US$78.2 million including contingencies and taxes o f which IDA will finance US$53.2 million equivalent). This component implemented by MPW includes four sub-components: (i)rehabilitation and reconstruction o f about 1, 050 kilometers o f secondary rural roads.(about 745 kmunder IDA financing and some 305 kmunder GOA financing). MPW's overall investment program was agreed at appraisal and 80% are considered confirmed. Some road works will be implemented under retroactive financing. Component B, Improvement of tertiary roads (US$52.1 million including contingencies and taxes o f which IDA will contribute US$52.1 million equivalent). This component implemented by MRRD includes five sub-components: (i) rehabilitation and reconstruction o f about 925 lulometers o f tertiary rural roads. The project will aim at promoting the development o f a professional labor-based contracting industry that i s particularly suited for tertiary road improvements. MRRD's investment program was agreed at appraisal and i s considered 80% confirmed. A part o f the rehabilitation programwill be carried out under retroactive financing. Component C, Institutional strengthening, project management and program development (US$6.7 million including contingencies and taxes o f which IDA will contribute US$6.7 million equivalent). Three sub-components are envisaged: (i)Rural roads management system (ii) capacity buildingactivities for staff who will be tasked to manage the rural road sector, and (iii) Project management, monitoring and evaluation and analysis o f data for reportingpurposes Implementation Implementation i s the responsibility o f the Ministry o f Public Works (MPW) and the Ministry o f Rural Rehabilitation and Development (MRRD). Overall coordination o f the program lies with a Program Implementation Units (PIU) located in each o f the two Ministrys. At a latter stage, the MRRDPIUmightbe mainstreamedintothe RuralRoads Department that was recently created in the Ministry. There is also the possibilitythat aroadagency mightbe created which couldabsorb bothPIUs. 149 2. How doesthe activity touch the target population or areas? Review the activity description and assess the "inteflace with the opium economy in terms of the " target population, the causes of cultivation, the type of actions envisaged and the targeting, timing and geographic location in relation to opiumproduction. Experience from other opium producing countries such as Pakistan, Thailand and Laos has shown that improving rural access serves to reduce the transportation costs for the movement o f legal goods and facilitate trade (a major constraint on moving out o f opium poppy cultivation) as well as increase the Government ability to deliver services and enforce the rule o f law. Labour intensive methods o f road construction also generate legal employment opportunities in opium poppy growing areas. NEW is a national program but its roll-out across the entire country is constrained by the deterioating security situation inmany areas, particularly those where opium poppy cultivation i s at its most prolific. This i s reflected in the fact that currently only US$ 1.45 million o f the total US$ 85 million available for sub projects proposed under Components A and B are to be implemented in the southern region (Helmand, Kandahar, Urizgan, Dai Kundi and Zabul) - a region which i s responsible almost 70% o f the total opium crop in 2007 and where there i s the greatest coincidence between opium poppy cultivation and insecurity. Despite this there are a number o f sub projects proposed in districts in other regions o f the country where opium cultivation could be considered extensive, or where the risk o f widespread cultivation i s relatively high (see Table 1). So far one quarter o f the allocated funds for subprojects have beenallocated to these areas. NERAP's coverage o f opium poppy cultivating districts is relatively high with 46% o f those districts in which sub projects are currently planned cultivating opium poppy in 2006 (the latest date for which district level figures were available at the time o f appraisal). Even inthose districts where opium poppy cultivation i s considered `Low' (between 0-500 ha), 3,650 ha o f opium poppy was grown in2006. The significant reductions in opium poppy achieved inthe north, north-east and central regions o f the country in 2007 mean that NERAP's coverage o f opium producing districts would not be as high this year in comparison to 2006. However, experience in Afghanistan suggests such dramatic reductions inopium cultivation cannot be considered sustainable. GivenNERAP's more extensive coverage inthe north, north-east and central regions it can play a key role inincreasing government delivery in these areas and facilitating a more sustainable move from illicit to licit livelihoods. 150 Table: N E Wproposedroadsby district inrelationto opiumproductionor vulnerability ITOTAL 1429,35 1 120,059,935I Low: 0-500 ha Medium 501 to 1500ha High -greater than 1500 ha 151 Giventhe geographic coverage and aims o fNERAPitcan play a fundamental role inestablishing the conditions for reducing opium poppy cultivation. Primarily it will improve rural access through the improvement o f secondary and tertiary roads. This i s most likely to benefit better off farmers landlords and owners o f irrigatedland (Class 1) who are more likely to reside in closer - proximity to district centers and to existing roads and already be engaged in more diverse agricultural productionand benefit from a range o f different sources o f income. Where roads give access to more isolated populated villages (Criteria 7 o f the criteria for road selection - Attachment 3) NEW can benefit poorer and in some areas more opium dependent sections o f the population. Whilst there are concerns about NEW'S capacity to employ the poorest sections o f the community during the construction period there will be increased wage labour opportunities for those dependent on opium poppy (Class 2), and in some o f the more isolated areas, those highlydependent on opiumpoppy (Class 3). 3. Doesthe activity promote governanceand institutionbuilding? Do governance and institution building under the activity create thepossibility at some stage of development of responsible interaction between the state and the population on the subject of drugs? Within the governance and institutional set up of the activity, is there scope to conduct dialogue or transmit information, education and communication about drugs? V%at measures could improve the impact on governance? The first element in Government's strategy against opium is to improve governance and the rule of law, strengthening public institutions and mechanisms to control drugs, together with the development o f responsible governance structures and "social contract" at all levels from the community up (which will help promote local governance structures and other aspects o f the national counter narcotics strategy). There i s no empirical evidence linkmgany particular type o f governance-enhancing intervention with reduced interest in the opium economy, but it i s nonetheless likely that buildinginstitutions and dialogue and extending service provision can be effective inestablishing social and legalnorms. Inthe case ofNERAP, roadprovision is one ofthe most visible signs of government delivering services. Not only directly through the improvement and building o f roads but also through improving access and travel time for health and education provision. All three o f these elements are key to demonstrating the government's capacity to improve the quality o f life o f the population, particularly inremote rural communities where opium poppy cultivation can be at its most concentrated and where linkages to the government may be at their most embryonic. The projects communication strategy offers the opportunity to address the drugs issue in an indirect manner and through its various media outlets and interaction with communities can give emphasis will be given to the role NEW plays in extending government, not only directly but through improving access to government services such as health and education, as well as promoting the development of the legal (non opium) economy. 4. I s there an impact on the standard of livingand on livelihoodsingeneral? Does the activity contribute to improvements in living standards and incomes in drug producing areas or "vulnerable" areas? What measures could improve the impact on the standard of living? Is the activity coordinated with other development efforts to avoid overlap or gaps and to 152 achieve a critical mass of impacts on livelihoods at the local level that would increase the attractiveness of licit activity over opiumproduction? The second element in Government's counter narcotics effort i s to improve the general level of economic activity and services to improve living standards and provide social protection. NEW contributes to this goal improving project beneficiaries access goods and services, resulting in shorter travel times, reduced transportation costs and greater parity in commodity prices between areas. Inthose areasinwhich opiumpoppy is grownNEW can contribute to a general improvement in the standard o f living of the rural population. It will also reinforce the message that the government i s delivering services to these communities who often perceive themselves as neglected or ignored. The combination o f physical infrastructure such as roads and improving access to social infrasucture in the form o f health and education have been key to developing social contract between state and the rural population in other opium poppy producing countries such as Thailand and Pakistan. The provision o f these services have been important entry points for the state in what had previously been ungoverned space and subsequently facilitated the development o f legal opportunities. NEW can play this strategic and catalytic role in gaining access (physical andpolitical) to more isolatedrural communities. However, there are ways in which NEW'S impact on rural livelihoods could be increased. Primarily this is through improving synergies with other development programs. For example exploring how NEW might be linked with other national programs both in the provision o f government services, such as health and education, and inincome generation such as EIRRE' and EHLP. One mechanismby which achieves this would be by working through CDCs and CDC clusters, where these exist. Cooperative relations between NEW and CDCs can not only provide an entry point to NERAP but can also enhance the status o f the CDCs, as channels o f information and cooperation on government development programs, able to bringbenefits to the community. Where Provincial Development Councils exist and to the extent that they are effective, NEW should also seek to work through that governance structure inorder to create a responsible dialogue and to improve coordination o fthe delivery o f development assistance. The Inter Ministerial Project Steering Committee can also give strategic direction for achieving closer integration o f NEW with other rural development programs. Inclusion o f the Ministry o f Narcotics on the steering committee would also serve to give greater prominence to drugs a s across cutting issue within NERAP. Are there directimpactsonthe targetpopulation? Are components of the activity likely to directly affect actual or potential drug producing households, and are these components adapted to maximize the chances of raising the opportunity cost of opium poppy cultivation and providing an alternative to opium? How can direct impacts be optimized? Is there a casefor targeting actual or "at risk" opium producing areas and households by selection of project areas growing or at risk of growing opium, or by modifying the components to address the production systems of those engaged in the opium economy - or who might be? Is such targeting desirable, and ifso, is itfeasible? The third element in Afghanistan's struggle against drugs i s to emphasize in development programs specific components that can have a significant impact on farmer behavior, with a focus on poorer farmers, laborers and more vulnerable areas. As discussed above (Section B), 153 development programs that offer farmers real livelihoods alternatives would need to have as many characteristics as possible that "mimic" the attractions o f the opium economy, particularly for smaller and poorer farmers andlabourers for whom choices are very limited at present. Improved rural access can help farmers gain better access to licit markets, reducing travel time and costs, reducing spoilage and thereby improving incomes. This impact will be the greater the more road improvements are linked to other programmes that promote diversification o f both cropping patterns and incomes sources. Increasing access to reliable and efficient inputs and output markets, technology transfer and farming advice will allow farmers to manage the risks associated with transition ino the licit economy and facilitate their move out o f illicit crops. Poorer farmers will get less direct benefit, but share cropping and employment opportunities may increase as farming intensifies, to the extent that cropping patterns change from cereals to higher value crops. Inpoppy producing areas there is a riskthat smaller farmers and the landless (Classes 2 and 3) will be marginalized ifthere is a shiftto licit cultivation. Where it occurs a transition from opium poppy cultivation to horticulture i s likely to result in a lower demand for on farm and off farm labour and less land will be available under sharecropping arrangements. With limited legal livelihood opportunities in situ, there i s a risk that smaller farmers will relocate to more remote areas in search o f land where they can grow opium poppy. If downstream value added and job creation can be increased - for example, by ago-industrial processing or grading and paclung for export - this could create considerably greater beneficial impacts for the poor and more vulnerable population, Classes 2 and 3, reducing the risk o f "migration" o f opium poppy cultivation. Currently, insecurity constrains the programme focusing more on areas in which opium poppy cultivationi s at its most intense. Also four fifths o f the project budget that is to be allocated to sub projects has already been committed. Ensuring a geographic balance in project delivery i s also critical for both the GOA'Swider goals and to ensure programmes do not inadvertently encourage opium poppy cultivation by being seen to focus greater amount o f resources on opium producing areas-knownas `perverse incentives'. With regard to NEW there is scope for increasing coverage in areas in which the security situation i s still manageable but opium poppy cultivation i s extensive or where its return i s considered likely. Given the relative shortfall in projects inthe south and the east this would be inkeepingwith the governmment's positionon geographic balance. For the 20% o ffunds for sub projects currently not committed priority should be given to increasing government delivery in the the largely cenral districts o f Nangarhar (Mohamand Dara, Shiwar, Bati Kot and Nazian) where the security risk i s considered `medium'; and in Helmand (Nad e Ali, Nawa Barakzai, Lashkargah) and Kandahar (parts o f Spin Boldak and Arghandab) where the secuirty risk is high. This could play a role in containing both the problem o f opium poppy cultivation and growing insecurity 6. I s there a risk of harm? Is there a risk that the activity maypromote drugproduction and how can that risk be managed? Could interventions be timed, targeted and coordinated with other initiatives to reduce this risk? Clearly an externality o f improving roads for the transportation o f goods and services i s that those wishingto transport illegal goods, includingnarcotics, will also be able to use them. This however i s not sufficient reason not to extend the network o frural roads. What i s requiredi s 154 effective controls on the movement o f illegal goods along key transport routes, a responsibility o f the MoI. However, establishing checkpoints responsible for searching vehicles for the movement o fprohibitedgoods i s not without risk. Insome areas checkpoints have become associated with the imposition o f `nuisance taxes' that may initself deter licit cultivation by increasing the transportation costs and thereby reducing the competiveness o f agricultural commodities. Coordination withM o Ito informthem o f the timetable for improvements to key roads into opium poppy growing districts or indistricts near the international borders would allow suitable law enforcement measures to be planned inadvance. The inclusion o f qualitative work, as part o f the projects ongoing impact monitoring work throughthe Social Inclusion Unit, analyzing the effect improvements inrural access and the security measures enacted inresponse have on the movement o f goods would highlight some o fthe constraints communities face inthe transition from illict to licit livelihoods. D o monitoring, evaluationandreportingcaptureoutcomes? How would any agreed contribution of the activity to national drug control objectives be monitored and evaluated? How could an understanding of the movement between illicit and licit livelihoods be used to inform both operations and policy? How would any emerging risks be captured and reported? There are clear indicators by which the results o f NEW will be measured. However, whilst recognising that reductions in opium poppy cultivation will depend on a number o f different factors outside the scope o f this programme consideration should also be given to l o o l n g at the impact the completion o f a sub projects has on agricultural diversity inareas where opium poppy i s currently grown. This should be included as part o f the plannedbaseline work It i s clear that . effects will be diffuse and hardto measure but more qualitative enquiry regarding the impact road improvements have on wider issues o f governance and the move from illicit to illict livelihoods should be integrated into the work of the Social Inclusion Unit in preparation for the MTR and the final evaluation. Does the activity contributeto Afghanistan's counter narcoticsefforts? Overall, to what extent does the activity contribute to Afghanistan's strategy to reduce and ultimately eliminate the opiumproblem? Rural roads contribute to the growth o f the licit market economy and to governance, and so influence incentives for licit production. Direct poppy reduction impacts have not been measured but should be explored. In general, development o f the market economy should create job opportunities for the poppy dependent, and development o f rural access should contribute to the replacement o f the poppy economy with licit livelihoods. In addition, rural access should increase governance, an important linkage in that as many as 108 districts out o f 396 currently have no road access to their provincial capital. NEW'S coverage o f opium poppy cultivating districts i s relatively high with 46% o f those districts in which sub projects are currently planned cultivating opium poppy in 2006. Despite security constraints there are also a number o f sub projects proposed in districts in other regions o f the country where opium cultivation could be considered extensive, or where the risk o f widespread cultivation i s relatively high. 155 However, impacts will be enhanced to the extent that: (1) NEW can use the remaining 20% o f its budget for subprojects that i s currently unallocated to increase its coverage in opium poppy growing areas, where security allows; and (2) linkwith complementary activities to achieve more development impact, particularly for poorer farmers and the landless. Canmoreimpactbeobtainedthroughthe activity? What solutions could increase the contribution of the activity to Afghanistan 's counter narcotics efforts? At what cost could those impacts be obtained, and what operational changes would be required? . There is scope for increasina coverage in areas in which the security situation i s still manageable but opium poppy cultivation i s extensive or where its return i s considered likely. Investinginthese areas could play a role incontaining both the problem of opium poppy cultivation and growing insecurity. The 20% o f funds not yet committed under NEW provide the resources for doing this. Currently given the projects limited coverage in the southern and eastern regions this would be in keeping with the . governmment's position on geographic balance. Maximize the use of direct contracting and of communitv labor, and timing works in poppy producing or poppy vulnerable areas at times o f peak labor demand for poppy (either to drain off labor or as cash for work incase of eradication). For example, works in Nangarhar and Helmand might be concentrated in the period February to May, and . those inBadakhshan inMay to July (coinciding with harvest time). Communcation Stratem: Integrate the role NERAPi s playing inextending government, not only directly but through improving access to government services such as health and . education, as well aspromoting the development of the legal (non opium) economy. Improve development synergies by networlung, coordination and ioint programming at the local level, linkinginto the extent possible with CDCs. NEWi s one o f a number o f other National Priority Programs that provide services to farmers that are "vertical" in their delivery mechanism; a centrally financed and managed program delivering benefits to farmers without essential reference to other similar "vertical" efforts. Field studies show the effective outreach o f many o f these programs but also the uncoordinated response they provide to community needs and the general bewilderment o f rural people at this welcome but haphazard delivery o f assistance. The development impact - and hence the counter-narcotic impact - will be considerably enhanced if NERAP can join with other programs to be more demand driven and more coordinated in their response. The CDCs may provide a mechanism for coordination "bottom up" from the community . level. Link to other proarammes in the area particularly those targeting poorer farmers by extending the provision o f credit, apcultural services, and vocational training. The specific potential for developing inter-linkages with these programmes in each N E W area though CDC's and at higher levels (CDC clusters, District, Province) will need to be identified. Inareas where opium poppy i s being cultivated and the proposed sub project i s being implemented in isolation from other sectoral interventions, follow up action with relevant line ministries and district and provincial development councils i s recommended. 156 The Inter Ministerial Proiect Steering Committee will give strateaic direction -for achieving closer integration of NERAP with other rural development programs. However, within the World Bank, there should be an explicit mandate to work up the synergies between NPPS at every level. Where other coordination mechanisms are effective - for example, Provincial Development Committees in some provinces - these should also be used. Inclusion of the Ministry of Narcotics on the steering committee would also serve to give greater prominence to drum a s across cutting issue within NERAP Monitoring and Evaluation;. Whilst recognising that reductions in opium poppy cultivation will depend on a number o f different factors outside the scope o f this project consideration should be given to loolung at the impact the completion o f a sub projects has on apcultural diversity in areas where opium poppy i s currently grown. This should be includedas part o f the planned baseline work. It i s clear that effects will be diffuse and hard to measure but more qualitative enquiry regarding the impact road improvements have on wider issues o f governance and the move from illicit to illicit livelihoods should be integrated into the work o f the social inclusionunit inpreparation for the MTRand the final evaluation. 157 Appendix 14: Action Planfor EnhancingTransparencyandAccountability 1. Experience in implementing projects within Afghanistan has shown that fiduciary management i s still an area o f weakness with transparency and accountability being particularly poor giving rise to potential corruption and leakage o f funds. Therefore it i s recommended that an action plan to enhance reporting and management o f finance within this project be prepared under the project. 2. The NERAP project anticipates two forms o f delivery: contracting through National Competitive Bidding (NCB) and community-based contracting. It i s expected that community- based contracting can be an option for those areas which are too insecure for national or international staff to work but where Government still wants to have a light development footprint. Such contracts will have few technical provisions and are therefore more adapted to tertiary roads. Technical supervision can be kept to a minimum whereas upfront social mobilization i s very important. This two-pronged approach has different requirements to ensure transparency and accountability but both options fall under the management responsibility o f the Implementation Consultant. 3. The objectives o f the action plan should be to: e Facilitategood financial management e Enhance disclosure o f information. e Develop a creditable systemto handle comments, suggestions and grievances with clearly definedincentives and remedies. e Develop monitoring indicators for compliance to the above agreements and for impact on outcomes. 4. Under these broad themes a number o f actions can be developed which will apply to both NCB contracts and community-based contracting. However, as i s described below, the community-based contracts require a different approach to ensure appropriate governance in project delivery. Financial Management 5. World Bank guidelines stipulate financial management regulations and these are covered in the relevant annex together with recommendations for continued capacity building in this area basedon findings from previous projects. Disclosure of Information 6. Disclosure o f information and transparency o f process has been proven a key element in reducing the opportunities for corruption and leakage o f funds. As such the broad range o f materials and media available in different areas o f the country should be employed to ensure that civil society has access to information which can help mobilize oversight. This might include local posters, public, oral disclosure o f pricing, bid values, works to be covered etc at local meetings, radio broadcasts and where appropriate website publication. 158 Comments, Suggestions and GrievancesHandling System 7. A Comments, Suggestions and Gnevances handling system, which includes maintaining a project log and filing to monitor status o f follow up o f each received comments, suggestions and grievances, will be established by the MPWNRRD PIUs with assistance from the Bank; and the Bank will monitor the implementation o f the system. The mechanisms will include provision for follow up investigations o f substantial complaints by Internal Auditors, or third party audit to ensure independency and reliability o fthe system. 8. Recording and appropriate referral of all incoming grievances or complaints will be undertakenwith each case generating an automatic, standard format report to the Bank. 9. The P l U will respond to all complaints, received from any source, within two weeks o f receipt, with copy to the National CoordinationUnit. A Comments, Suggestions and Grievances Handling component will be included on the future N C U website. This will be updated on a monthly basis. 10. For the complaint mechanism to function efficiently, the information concerning the alternative conduits for complaint (telephone 'hotline', dedicated email address andPO Box) shall be widely publicized. Public will be encouraged through web based campaigns, newspaper advertisements and displays on boards at visible locations, to provide information o f any misconduct, misappropriation and gnevance caused to any member o f the public and seek to redress such grievance. 11. Any entity that is found to have misused funds, or not effectively carried out key elements o f the anti-corruption plan, may be excluded from subsequent participation in the project being implemented under the Bank funding as well as for other works being carried out by the department. Information regarding such cases, where lessons are learned and funds are retrieved, will be widely published for information o f the members o f public. Strict procedures to ensure anonymity o f informants will be enforced. 12. Tracking o f the status o f investigations and measures taken will be reported in monthly reports to management and the Bank. Complaints deemed possible serious infringements may be further investigated by the Bank. 159 Table Action Plan to Manage Conflicts, Suggestions and Grievances - Transparency/ Action To betaken Time line I Action DisclosureAspect & A systemneedsto be A comments, suggestions and grievances ByBoard I developed to handle handling system, which includes maintaining Approval comments, suggestions a project log and filing to monitor status o f and grievances with follow up o feach received comments, MRRD clearly defined suggestions and grievances, will be responsibilities and establishedby the PIUs. The mechanisms procedures will include provisionfor follow up investigationso f substantial complaints by the internal Auditors, or thirdparty audit to ensure independency and reliability o f the system. A comments, suggestions and grievances BY M P W I handling component will be included on the implementation MRRD website o f the ministries and the NCU. Ministries will be encouraged to develop a policy describing incentives and sanctions. Tracking ofthe status o f investigations and measures taken will be reported inmonthly reports to management and the Bank. Complaints deemed possible serious infringements may be further investigatedby the Bank. Monitoring Indicatorsfor Compliance to theAbove Agreements andfor Impact on Outcomes 13. The Bank will monitor implementation o fthese elements, through inter alia: Disclosure of information will be supervised mainly through: (a) checking the frequency and comprehensiveness o f website updates, and (b) checlung the distribution o f materials to key participating civil society groups; and (c) checlung the comprehensiveness o f information available at Public information luosks. The complaints handling system and the system of sanctions and remedies will be supervised mainly through: (a) periodic review o f statistics based on records kept; and (b) field level checks to ensure that problems are being reported and acted upon. Community-BasedContracting 14. Community based contracting also has to adhere to similar principles as outlined above: clear financial management, transparency, ability to air gnevances and monitoring o f implementation and outcomes. However community-based delivery o f projects in Afghanistan depends largely on the local context o f that community. As has been found with the National Solidarity Program each community may have different governance issues and as such the governance action plan should take their particular context into account. The delivery o f projects for NERAP should therefore follow the NSP guidelines developed and as can be found in the Draft Project Implementation Manual. The Manual covers the following crucial areas: 0 Community Development Committee (CDC) organization and management 0 Transparency and accountability withinthe CDC 0 Disclosure o f informationwithin communities 160 a Disbursement policies andmanagement o f funds a Security o f funds a Procurement and contracting a Complaints processing andresolution a Monitoring and evaluation 15. The policies formulated for NSP should be adopted in as far as they are appropriate for the individual CDCs delivering projects. . 161 Appendix 15: EvidencefromNFWA2005 Introduction 1. The purpose o f this appendix is to report on access to road infrastructure in Afghanistan and analyze the incidence o f rural roads implemented under the National Rural Access Program (NRAP) by using the 2005 National Risk and Vulnerability Assessment (NRVA). The NRVA 2005 is a multi-topic national household survey covers topics such as demography, housing infrastructure, assets and credit, agnculture and livestock, migration and remittances, assistance programs, shocks and coping strategy, and child and maternal health. 2. Sampling and coverage of the NRVA 2005 data: The survey covers 30,822 households in 2,597 communities. The data i s representative at its analytical domains, which are the 34 provinces (and kuchi - a nomadic population) and 10 urban areas whose populations are larger than 10,000 households. Intotal there are 45 analytical domains. The survey teams also recorded the latitude, longitude, and altitude o f each community, using Global Positioning System (GPS) device. This information allows us to link rural road project information to household survey data. 3. This appendix will start by loolung at how the poor can access road infrastructure, and then shows linkages between better infrastructure and other outcomes such as employment and health. Subsequently, the NEEP and NRAP are analyzed, both in terms o f its function as cash-for-work and infrastructure improvement programs, and interms o f allocation o frural roads. Access to roads andtransportationof the poor 4. Transportation is essential to poverty reduction efforts because it provides access to job opportunities, markets, and basic services. Connection to the outside world i s also important for national unity and for central government to provide services to its people. The key indicator o f access to road i s the "access index", which i s defined as the percentage o f households within 2 hlometers o f an all-season drivable road'. Table 1 shows that accessibility inrural areas i s much lower than urban areas. Also, the gap between accessibility o f the poor and non-poor in rural areas i s higher than in urban areas (6 versus 2 percentage points). This suggests that poverty incidence inrural areas i s correlated with lower access to all-weather roads. 5. Improvement O f infrastructure Can Table 1Access index (Yo),by area and poverty status be implemented in many forms. Rural Urban Total Accessibility can be improved Non-poor 58 9s 65 through construction and Poor 52 93 57 rehabilitation Of Illra1roads as Et: 56 94 62 Kuchi's figures are notpresentedinthis table, but are includedinthe Access to road i s fundamental to total .. access to other services such as health 1A caveat in terms of access index, there are two potential errors in the data collection. First, the community may not know the precise distance between community and the nearest drivable road. Furthermore, rounding the distance to the nearest kilometer could overestimate the access index, if the distance i s more than 2 kilometers. Second, the concept o f all-weather road or roads that are usable by vehicle all year may be different across communities. These problems can be addressed with better training and supervision inthe next round o fNRVA, to be implemented during 2007 and 2008. 162 care. NRVA 2005 data shows that communities with better accessibility, located closer to roads or markets, tend to have health workers in villages. Moreover, communities without health workers tend to be significantlypoorer. areas, 36 percent of households living in Table 2: Remotenessof communitiesand presenceof health villages within 1 hour distance from the food workers market have community health workers in ~ ~ ~ ~ ~ ~ ~ village, compared to only 23 percent o f those summer Kuchi Rural Urban Total who live more than 1hour away from the food > 1hour 15 23 61 23 market (Table 2). Another measure of 1hourorless 43 36 69 50 remoteness, distance from the nearest road, has Total 23 28 69 31 Linksbetweenpovertyreductionandroadaccess 7. The spatial pattern o f poverty i s also likely related to spatial variation in attributes like accessibility to roads (an indicator o f remoteness) and the penetration o f markets. As in many countries, accessibility andpoverty appear to be closely related. 8. Employment and occupation can explain the linkages between accessibility and improvement Table 3 Characteristicsof householdsin trade and in living standard. The NRVA 2005 shows that servicesby area households that engage intrade and services tend %Head %Road %NSPin to be in higher consumption quintiles. literate access community Investigating further at attributes o f households Rural engaging in trade and services activities, it NotinT&S 20 55 34 reveals that road access matters. Table 3 InT&S 31 60 31 compares select characteristics o f households Total 24 56 35 involved in any trading and services activities Urban with those who do not, separately for urban and Not inT&S 46 94 11 rural areas. Overall, literacy i s extremely crucial InT&S 61 95 8 in participation. Literacy rate o f heads o f Total 58 94 9 households engaged in trading and services are Note: rural includeKuchi; road access is defined as much higher than that o f those who do not. Road - community located within 2 kilometers of all-seasonroad. access and existence of'NSPprogram are also important, to a smaller extent, inrural areas. This i s probably because availability o f roads leads to better access to markets, which i s necessary for trade and service activities. This finding i s also consistent with the spatial pattern o fpoverty. 163 NEEPas a cash-for-workprogram participate worked for around 30 days in the All NEEP NSP program duringthis period. The average daily participation rate (% 4.4 0.7 1.6 wage rate i s nearly 150, implying four labor days spent on ;ash- days o f labor are enough to earn income for-workprojects 32.3 42.9 32.2 equivalent to the poverty line.3According to daily wage rate 149.5 145.4 148.8 NRVA 2005, at least 86 percent of Ontime cashpapent(% households participating in a cash-for-work ofhouseholds) 86.3 89.2 84.9 project reported payment was made on time Source: Staff estimation based onNRVA 2005 10. NEEP and NSP: The National Emergency Employment Programme (NEEP) and the National Solidarity Program (NSP) are two major cash-for-work programs in Afghanistan. 0.7 percent and 1.6 percent o f population participated inNEEP and NSP, respectively, between the harvests o f 2004 and 2005. On average, participants spent 43 days and 32 days for NEEP and NSP during this period. For both projects, more than 80 percent o f participants received cash payments on time. It should be notedthat the rural road program has shifted its focus from being a cash for work programas implemented under NEEPto improving quality and durability o f rural infrastructure (see Box 1). 11. Size of the transfer from cash-for-work programs. Table 5 indicates estimated average amounts o f transfer from all cash-for-work programs to each participant.' According to Table 5: Size of transfers from cash-for-work programs Table 5, cash-for-work programs provide quite All NEEP NSP a large amount o f transfer to participants. For Total amount from the example, a typical cash-for-work program cash-for-work project provides AF 4828 per participant, which (Afs) 4828 6242 4790 corresponds to 80 percent o f the average The ratio to household monthly household expenditure for a monthly expenditures 0.81 1.04 0.80 household o f seven members. NEEP and NSP Source: Staffestimationbasedon NRVA 2005 programs tend to provide 100 percent and 80 Note: The total amount from cash-for-work per participant was percent o f the average monthly household calculatedby multiplying the average daily wage ratewith the average labor days (fromTable 4). The monthlyhousehold expenditure to a participant, respectively. expenditurefor a householdof sevenmemberswas calculated Since all these figures are per participant, a by multiplying averageper capita consumption expenditurewith EP"PI1 household with multiple participants can earn even more income from cash-for-work programs. Notably, the programs do not mandate that only one member o f a household can participate. 2NRVA 2005 canidentifywhich households have at least one householdmember who participatedina cash-for-work program; however, there i s no exact number o f household members who participated inthe program. AF 593 is the poverty line usedhere. 4There is an issue on consistency in coverage ofprograms between household and community yestionnaires. Detailed discussions on this issue are included inAnnex 3, section 11. The average transfer per participant i s computed by multiplyingthe average daily wage with the average labor days spent on the programs 164 12. It is important to note here that the size o f transfers shown above i s likely to overstate the benefit or gains to participant households, since they do not take into account the opportunity cost or income foregone from participating inthe program. 13. Table 7 illustrates how the income from cash-for-work programs contributed to participants and their families. It shows that most of the participants achowledged benefits from the programs. More than 70 percent o f households with program participants reported that transfers from cash-for-work programs increasedtheir food consumption. - Table 6: Reasons for not participating in any Table 7: How did the cash-for-workhncome cash-for-work programs since the harvest of generating program(s) benefit your household in _ _ - 2004 (%) the last year? no programinarea 59 All NEEP NSP didn't know there was a no benefit 7 7 4 programme inthe areas 20 bought more food 72 74 72 no able bodiedperson 7 Paid for education 1 2 2 householdmembers didnot want Paidmedical expenses 7 6 9 to participate 10 Paidhouse rent 0 1 0 householdmembers were not selected by Male shura 2 Paid off debts 7 4 8 householdmembers were not investedinproductive assets 0 1 0 selected by Female shura 0 improved literacy/education 0 0 0 householdmembers were not income generating skills selected by Male CDC 0 acquired 1 2 0 householdmembers were not Other 4 5 6 selected bv Female CDC 0 Source: Staff estimationbased onNRVA 2005 householdmembers were not 14. Reasons for not participating in any cash- selected byproject manager from for-work programs: According to Table 6, having no program in area is by far the most important reason for households not participating. Inaddition, lack of awareness ofthe programappears to be a major reason why households did not participate inany cash-for-work programs. the other hand, ITable 8: ComDarison in kev Droeramindicators amone Kuchi, - - Program Participation does " _ Rural, and U;ban areas not seem to be constrained labor days by Shuras and CDCs. spend on Share o f Along with most cash cash-for- Daily households payments beingpaid on time, work wage with on-time participation this suggests that the program rate cash payments rate programs were implemented KUChi 48 135 67 0.9 fairly well in the Rural 31 148 86 5.1 communities where they are urban 51 174 91 2.1 placed. However, the Source: Staffestimation based onNRVA 2005 165 16. Comparison across areas. Program participation is very limited among Kuchi residents, at less than 1percent (Table 8). The program participation inrural areas i s 5 percent while that in urban areas i s 2 percent. Participants from urban areas tend to spend more days for cash-for-work program, receive a higher daily wage rate, and receive on-time cash payments more frequently than those inother areas. Table 9: Income groups and some indicators of cash-for- work program Consumption working daily wage participation rate Quintile days rate (%) Poorest 36.7 143 5.4 42 33.5 146 4.6 43 29.7 146 4.4 44 34.1 157 4.3 18. As Table 9 indicates, the Richest 28.4 162 3.9 participationrateamong thepoor is Source: Staff calculation usingNRVA 2005 higher than among the rich. The Note: Income quintile was calculated usingreal per capita household consumption expenditures 19. On the other hand, an average daily wage rate o f participants from the rich households is significantly higher than that o f poor participants. According to Table 9, a participant from the richest quintile received 14percent more than a one from the poorest quintile on the average. 20. This result may reflect the fact that richer participants have higher bargaining power that results inhigher wages paid to them, as well as the fact that richer participants are more like@ to participate where (or when) the wages were higher, because they have higher opportunity cost (or income foregone) o fparticipation. In summary, since either or both o f these phenomena may be occurring, it i s difficult to interpret this simple correlation between poverty status of participants and wage rates. 166 Allocation and incidence analysis of NRAP:Evidence from combining NRVA and road maps 21. Geographical allocation of NEEP and N R A P program implementation. Figure 1 overlays the locations o f rural roads built by NEEP and NRAP projects onto the province level map of rural accessibility index (see Box 1). Note that roads used inthis analysis are those built from the inception of the project until Figure 1Map of rural accessibility index at province level and m a l road November 2006. project locations There are two ministries that implement the rural road programs: Ministry o f Rural Rehabilitation and Development and (MRRD) and Ministry of Public Work (MPW). The map includes road projects implemented by both agencies. It should be noted that MRRD roads Note: Project as of November 2006. Thick lines: MRRDroads; thin lines: MPW include roads roads. implemented under EC, RAL. and NEEPprojects, while MPWroads shown here consist ofroads under LWP,NEEP, NEEPRAand NRAP. 22. The map shows that the program was concentrated in central and eastern regions o f the country (densely populated areas) but also penetrated into many geographically isolated areas measured by the accessibility index constructed from NRVA 2005 data. It is worth noting that there has been no operation inDaykindy - one of the most disadvantaged provinces. This might be related to the fact that Daykmdy hasjust separated from Uruzganprovince (See Annex Table 1 for rural accessibility index at province level). 167 IncidenceofNRAProadsandpoverty 23. Combining project location with the NRVA 2005 Table 10Percentageof householdsin data, it can be shown that the roads implemented under catchments areas of any NRAProads NEEP/NRAP-hence NRAP roads-- tend to be in % HHincatchments areas where richer households are located. Table 10 Consumption Quintile areas shows percentage o f households in each consumption Poorest 22 quintile that are located within two kilometers of an Q2 30 NRAP road. Only 22 percent o f households in the 43 34 poorest group are close to any NRAP road. This figure 44 35 rise steady as we look at richer groups o f households. Richest 37 The data also show that urban households tend to Total 32 benefit from NRAP roads; proportional wise, more Note: 1) Roads considered are those built since inceution to Nov, 2006. . urban households are in catchments areas o f NRAP roads than rural households. This finding is sensible since most rural roads are built to link rural villages to city centers. 24. It i s also insightful to analyze incidence o f NRAP roads within urban and rural areas. Table catchments Tablell. Percentage of householdsin b area and overt status 11breaks down sample household into rural and Rural Urban urban areas, as well as poor and non-poor Non-poor households. The same definition of catchments areas i s applied. It is clear that, for rural Total 49 population, the poor benefit less from the rural Note: 1) Roads considered are those built since inceptionto roads under NRAp than their non-poor Nov, 2006.3) Results ofnomadic (kuchi) community are not counterparts. presented separately due to its small sample size; Total figures include Kuchipopulation. 25. The relevant question i s where the rural poor that have not been served by the program are. Figure 2 presents the relationship between location o f rural poor and road network build by NEEP/NRAP. Each dot represents 2,000 poor people. Provinces with dense dots reflect high density of rural poor. This map i s then overlaid by a map o f rural roads built by NEEP/NRAP usedinFigure 1. According to Figure2, programimplementation i s not necessarily concentrated in areas with high density of rural poor. On the one hand, provinces like Khost, Nangahar and Laghman have high density o f rural poor and are served by NEEP/NRAPprojects. On the other hand, the Figure2 Density of ruralpoor andrural roadprojectlocations programs have not had much presence in Helmand, Daykmdy, Takhar, Paktika, and Ghami where many of the rural poor reside. It should be noted that this analysis has not factored in the feasibility o f road Note: Project as of November 2006. Thick lines: MRRDroads; thin lines: M P W roads. Number ofrural poor is 2,000 poor rural persons; dots are placed r building. Topographical situation insome areas may not allow for the road to be built. Security i s also another factor. This analysis could be improved immensely if a good Census data were available. 26. Conclusion. The NRVA 2005 data shows that rural roads program i s important for poverty reduction efforts. It can improve high-return employment opportunity as well as health outcomes. On the other hand, the poor and the rural residence still trail behind in terms o f access to road infrastructure. Combining knowledge o f poverty profiles, poor areas, and project sites can help provide insights for the future projects to target the poor. Annex TableA-1 Percentageof householdsincatchments areas by urban-ruralarea % HHincatchments areas M P W MRRD Any NRAP Rural 23 9 28 Urban 40 13 49 Total 26 10 32 Note: 1) A household is incatchments area if its community is located within 2 kilometers o f the NRAProad. 2) Roads considered are those built since inceptionto Nov, 2006. 3) Results ofnomadic (kuchi) community are notpresented separately due to its small sample size; Total figures include Kuchi population. Table A-2 Percentage of households in catchments areas by urban-rural area ministry, area, and povertystatus Rural Urban Total Non-poor M P W 26 38 29 MRRD 10 14 11 Any NRAP 32 48 35 Poor M P W 17 49 21 MRRD 7 10 7 Any NRAP 22 54 25 Total M PW 23 40 26 MRRD 9 13 10 AnyNRAP 28 49 32 Note: 1) A household is in catchments are if its community is located within2 kilometers ofthe NRAProad. 2) Roads considered are those built since inception to Nov, 2006.3) Results o f nomadic (kuchi) community are notpresented separately due to its small sample size; Total figures include Kuchipopulation. Table A-3 Percentageof householdsincatchments areas by consumptionquintile % HHincatchments areas Consumption Quintile M P W MRRD Any NRAP Poorest 18 6 22 4 2 25 9 30 4 3 28 10 34 4 4 29 11 35 Total 26 10 32 Note: 1) A household is in catchment area ifits community i s located within2 kilometers o f the NRAP road. 2) Roads considered are those built since inceptionto Nov, 2006. 169 Appendix 16: ProjectPreparation and Supervision ProcessingSchedule ~~~ ~ Planned ~~~ ~ Actual PCNReview 12/18/2006 12121/2006 InitialPID to PIC 01/09/2007 12/27/2006 InitialISDS to PIC 01/09/2007 01/22/2007 Begin Preparation 01/30/2007 01/3012007 Appraisal 09/04/2007 08/12/2007 Negotiations 10/22/2007 11/08/2007 BoardRVP Approval 12/06/2007 PlannedDate o f Effectiveness 01/01/2008 Planneddate o f Mid-termReview 06/30/2009 PlannedClosingDate 12131/2010 Key Institution Responsible for Preparation of the Project. Program Development and Coordination Uniti s the key implementing entity which coordinates the program on behalf MPW and MRRDwith the help o f two PIUs. Bank Staff and Consultantswho worked on the Project Name Title Unit Andrew Beath Consultant SASDT Anna Cestari Young Professional SASDE Asila Wardak Jamal Consultant SASDS Asta Olesen Sr. Social Development Specialist SASDS David C. Freese Sr. Finance Officer LOAFC DavidMansfield Consultant DFID DeepalFernando Sr. Procurement Specialist SARPS Hasan Afzal Zaidi Transport Specialist SASDT JohnD.Howe Consultant SASDT Kenneth C. Okpara Sr. FinancialManagement Specialist SARFM Liagat Butt Program Assistant LEGES MariamHaidary ProgramAssistant SACAF MarianneKilpatrick Sr. Transport Specialist SASDT M i o Takada Rural Development Specialist SASDA MohammadAnf Rasuli EnvironmentalSpecialist SASDN Mohammad Qahir Haidari Co Team LeaderISr. Operations Officer SASDT Naila Ahmed Consultant SASDA Rajesh Dongol Program Assistant SASDT Ramy Rabenja Consultant SASDT Sheila Braka Musiime Sr. Counsel LEGES SusanneHolste Co Team LeadedSr. Transport Specialist SASDT Tawia Addo-Ashong Sr. Transport Specialist AFTTR Venkatesh Sundaraman Economist SASHD Zabiullah Ahrary Team Assistant SACAF 170 BankFunds expendedto date on ProjectPreparation 1. Bank Resources : US$191,181.48 2. Trust Funds : Nil 3. Total : US$191,181.48 (asofOctober4,2007) EstimatedApproal and Supervision Costs 1. Remaining costs to approval : US$29,139.00 2. Estimatedannual supervision cost : US$85,000.00 171 Appendix 17: Documentsinthe ProjectFile A. Project'sBackgroundDocuments Environmentand Social ManagementFramework, August 2007. B. BankStaffDocuments Project InformationDocument (PID), Appraisal Stage, August 27,2007. Integrated Safeguards Data Sheet (ISDS), Appraisal Stage, August 23,2007. Aide Memoire, Appraisal Mission, August 12-21,2007. A PolicyNote onRuralAccess inAfghanistan, June 2007. Aide Memoire, Pre-appraisalMission, June 13-24,2007. Aide Memoire, PreparationMission, February 13-22,2007. Minutesofthe Project ConceptNote (PCN) ReviewMeeting,January4,2007. Integrated Safeguards Data Sheet (ISDS), Concept Stage, December 15,2006. Project ConceptNote, December 15,2006. Project InformationDocument (PID), Concept Stage, December 15,2006. Aide Memoire, IdentificationMission, November 22 -December 9,2006. 172 Appendix 18: Statementof Loans and Credits I I Difference Active Projects BetweenExpected IDA andActual Iproject^^IFY 1 ProjectName Revtd Frm PO88719 2005 AF InvestmentGuaranteeFacility 5.00 4.03 2.72 PO90928 2007 AF PSD SupportProject 25.00 25.54 0.23 PO78936 2004 AF: Emer IrrigRehab 65.00 39.99 12.62 6.88 PO83720 2004 AF: EmergencyCommunications - - 22.00 3.85 2.87 Development PO98256 2006 AF: Hort. & Livestock Project 20.00 PO99980 2007 AF: Public FinancialManagement 33.40 Reform P101502 2008 AfghanistanHIV/AIDSPrevention 10.00 Project PO78324 2003 AfghanistanHealth Sector Emergency 89.60 30.00 20.40 35.00 173 Appendix 19: Countryat a Glance Afghanistan at a dance 1/5/07 POVERTYand SOCIAL South LOW- Afnhanistan Asia income 3eveloprnent dlamond' 2005 Population,mid-year (millions) 1,470 2,353 GNI per capita (Atlas method, US$) 684 580 Life expectancy GNI (Atlas method, US$billions) 7.0 1,005 1,364 T Average annual growth. 1999.05 Population(%) 1.7 1.9 Labor force (%) 2.3 2.1 2.3 GNI Gross per primary Most recent estimate (latest year available, 199905) capita enrollment Poverty(% of populationbelownationalpovertv line) Urbanpopulation(% of totalpopulation) 24 29 31 Life expectancy at birth (years) 45 63 59 I Infantmortality(per 1.000 live births) 165 66 80 Child malnutrition(% of childrenunder 5) 45 39 Access to improvedwater source Access to an improvedwater source (% ofpopulation) 40 64 75 Literacyf% ofpopulation age 15+) 29 60 62 Gross primaryenrollment (% of school-agepopulation) 54 110 104 -Afghanistan Male 116 110 Low-incomegroup ~ Female 105 99 KEY ECONOMICRATIOSand LONG-TERMTRENDS 1985 1995 2004 2005 Economic ratlos' GDP (US$ billions) 6.0 7.3 Gross capitalformation1GDP 31.1 25.0 Exportsof goods and ServicesIGDP 11.5 12.4 Trade Gross domesticsavingslGDP -13.1 -18.2 T Gross nationalsavingsIGDP -13.1 -16.2 CurrentaccountbalancdGDP 1.4 -1.0 savingsDomestic I+ formationCapital InterestpaymentslGDP Total debtiGDP Total debtservicelexports 6.7 Presentvalue of debVGDP Presentvalue of debtiexports Indebtedness 1985-95 199505 2004 2005 2005.09 (average annualgrowth) GDP 8.0 14.0 -Afghanistan GDP per capita -_. Low-incomegroup Exportsof goods and services -2.8 31.4 STRUCTUREof the ECONOMY 1985 1995 2004 2005 (% of GDP) Agriculture 37.2 36.1 Industry 24.4 24.5 Manufacturing 15.8 14.9 Services 38.3 39.4 Householdfinal consumptionexpenditure 104.0 109.6 Generalgov'tfinal consumptionexpenditure 9.1 6.6 I -GCF Importsof goods and services 55.7 55.7 +GDP I 1985-95 1995-05 2004 2005 (average annualgrowth) Agriculture -17.1 11.3 Industry 32.4 16.4 Manufacturing 21.9 10.0 Services 34.6 14.3 Householdfinal consumptionexpenditure -5.0 20.3 Generalgov't final consumptionexpenditure -7.7 14.0 Gross capitalformation -11.9 -2.7 -EXPO~~S +Imports Importsof goods and services -25.7 20.9 Note:2005 data are preliminaryestimates. * The diamonds show four key indicatorsin the country(in bold)compared with its income-groupaverage. If data are missing,the diamond will be incomplete. 175 Afghanistan PRICES and GOVERNMENT FINANCE 1985 1995 2004 2005 inflation (%) Domestic prices (% change) 1 4 0 ~ Consumer prices 26.7 12.7 Implicit GDP deflator 17.0 11.9 Government finance (% of GDP,includes currentgrants) 1 Current revenue 9.5 9.8 Current budget balance 0.1 1.1 -GDP -CPI Overall surpiusldeficit -0.7 0.1 deflator TRADE 1985 1995 2004 2005 (US$ millions) Exportand Importlevels (US$ mill.) Total exports (fob) 592 755 Freshfruits 4'm T Dried fruits Manufactures Total imports(citl 2,713 3,280 Food Fuel and enemy Capital noods Exportprice index (2000=100) 99 CQ 01 02 03 04 05 Importprice index (2000=100) HExports HImports T e n s of trade (2000-100) BALANCEof PAYMENTS 1985 1995 2004 2005 (US$ millions) Current account balanceto GDP (%) Exportsof goods and services 668 1,720 1,705 4 T Importsof goods and services 1,076 4,432 4,849 Resourcebalance -408 -2,712 -3,144 Net income 21 8 27 Net currenttransfers 2,787 3,048 Currentaccount balance 83 -70 Financinnitems (net) 381 448 Changesin net reserves -26 -464 -378 Memo: Reservesincludinggold (US$ millions) 611 I,283 1,662 Conversionrate (DEC,/ocal/US$) 50.6 47.8 49.7 EXTERNAL DEBT and RESOURCE FLOWS 1985 1995 2004 2005 (US$ millions) Total debt outstanding and disbursed 2,274 5,619 iBRD 0 0 IDA 0 0 Total debt service 47 89 IBRD 0 0 IDA 0 0 Compositionof net resourceflows Officialgrants Officialcreditors 210 0 Privatecreditors 0 0 Foreign direct investment(net inflows) Portfolioequity (net inflows) World Bank program Commitments 0 0 Disbursements 0 0 Principalrepayments 0 0 Net flows 0 0 interestpayments 0 0 Net transfers 0 0 DevelopmentEconomics 1/5/07 176 MAP SECTION IBRD 35629 60° E 65° E 70° E 75° E U Z B E K I S TA N TA J I K I S TA N TA J I K I S TA N TURKMENISTAN AFGHANISTAN BADAKHSHAN Faisabad JAWZJAN B A L K H K U N D U Z Sheberghan ¯ Kunduz ¯ Taloqan ¯ ¯ Mazar-e ¯ Sharif ¯ TAKHAR Saripul Samangan ¯ Baghlan ¯ Meymaneh FA R YA B SAMANGAN B A G H L A N S A R I P U L PANJSHER Bazarak NURISTAN 35°N B A D G H I S Mahmud-e Raqi ¸ ¯ ¯ ¯ 35°N Qal`eh-ye Now B A M YA N PARWAN KAPISA Nuristan ¯ ¯ Asadabad ¯ ¯ Charikar ¯ ¯ ¯ Bamyan ¯ ¯ LAGHMAN KUNAR Mehtarlam ¯ Meydan ¯ KABUL ¯ Jalalabad ¯ ¯ ¯ Herat ¯ Chaghcharan ¯ WARDAK Shahr KABUL H E R AT G H O R NANGARHAR LOGAR Khadir Pol-e `Alam D AY K U N D I PAKTYA Ghazni¯ Gardiz ¯ G H A Z N I KHOST PA K I S TA N Kowst Sharan U R U Z G A N FA R A H Tarin Kowt ¯ PA K T I K A ISLAMIC Farah ¯ Z A B U L REPUBLIC AFGHANISTAN Qalat ¯ NATIONAL EMERGENCY RURAL OF IRAN ACCESS PROJECT (NERAP) Lashkar Gah Kandahar ¯ ¯ MoPW FINANCED PROJECT ROADS MRRD FINANCED PROJECT ROADS Zaranj H I L M A N D K A N D A H A R PROJECT BRIDGES N I M R O Z NATIONAL HIGHWAYS REGIONAL HIGHWAYS 30°N 0 50 100 150 Kilometers PROVINCE CAPITALS 30° N 0 50 NATIONAL CAPITAL 100 Miles DISTRICT BOUNDARIES This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other information PROVINCE BOUNDARIES shown on this map do not imply, on the part of The World Bank Group, any judgment on the legal status of any territory, or any 60° E PA K I S TA N 65° E endorsement or acceptance of such boundaries. INTERNATIONAL BOUNDARIES 70° E SEPTEMBER 2007